Off-payroll working – and how changes in law could affect you

Off-payroll working – and how changes in law could affect you

19.5.2021 | Tax

Off-payroll working – and how changes in law could affect you

Ramifications across all sectors, including transport and logistics. 

Off-payroll working has become headline news recently, with change in the IR35 laws set to affect businesses and workers across the country.

From now on, large and medium-sized businesses will have to treat their off-payroll workers as if they were on-payroll, so by law have to offer sickness and holiday benefits.

It is a changeset to affect industries of all types – from logistics and freight to clerical workers and teachers.

Here, Andrew Diver, Head of Tax at Beatons group, gives his insight into how the rule changes could affect you.

What is IR35?
Essentially, IR35 is the off-payroll working rules set by the Government, introduced in 2000 to combat what is known as ‘disguised’ employment.

‘Disguised’ employment is where employees are paid as a client, via an intermediary such as their own limited company, so they can avoid paying income tax and National Insurance.

The IR35 rules were brought in to combat this.

How have the rules changed?
Earlier this year, changes were made to the IR35 rules for the private sector.

From now on, medium and large businesses will need to check all off-payroll contractors using the Check Employment Status Tool (CEST) to determine whether the contractor should be treated as an employee and PAYE deducted before payment is made to the contractor.

The rules do not apply to small businesses unless they are owned by a larger parent company.

The big change is that the onus is now on the company engaging the worker is legally obliged to check the IR35 status. Previously, where a business contracted with another company, it was the contractor’s companies obligations to consider whether PAYE would apply.

It means for firms working with several contractors; a check will have to be submitted for each by the employer.

If companies do not abide by the new rules, they could face a hefty fine.

How to avoid getting a fine
From April 2021, large and medium-sized businesses are responsible for determining whether a worker is an employee or contractor.

Businesses should review all their relationships with contractors and consultants.

To identify the employment status of a worker, the HMRC has created the CEST online tool to help out. The difficulty still arises for businesses that many of the questions in the CEST tool are subjective, and the tool itself can produce a response which states that, based on the answers, the position is inconclusive.

Be careful to maintain an audit trail as you go – as long as you stay within the rules and have evidence to back you up, you should avoid a penalty.

If you need further advice, visit beatons.co.uk

 

Freeports, hot air or hot stuff?

Freeports, hot air or hot stuff?

18.5.2021 | Ports

Freeports, hot stuff or hot air?

Jon Swallow of logistics specialists, Jordon, questions Freeport benefits and asks is it good, bad or ugly? 

Freeports, the post-Brexit panacea – coming soon to Felixstowe, Teesside, London Gateway, Liverpool City Region, Humber, Southampton, Plymouth, and East Midlands Airport.

Here at Jordon, we’ve been monitoring the freeports initiative for some time as we’ve dealt with Brexit over the last four years. Lately, we have uncovered a clear divide in opinion of whether the benefits being touted will be game-changing or simply that the whole notion will quietly fade away as businesses struggle to find ways to benefit.

The EU currently has about 80 freeports, but this number appears to be winding down due to a reason similar to us in 2012, where the UK Government closed all the UK’s freeports (yes, we had them whilst we were in the EU) because apparently there was no evidence of economic benefit.  However, the government believes by now not being a member of the EU, we can re-introduce them and do things differently, which on the one hand is correct – but as we know, trade is a two-way street, which we will come to later. You can view the Parliamentary transcript here.

The good

So, we know freeports are in general exclusive zones where normal rules and taxes don’t apply, but what are freeports actually for?  If you ask what a freeports objective is, the government paper makes clear:

  1. To establish Freeports as national hubs for global trade
  2. To promote regeneration and levelling up
  3. To create hotbeds of innovation

When you look at those three points, it feels good, if a bit woolly, yet there seems to be an awful lot riding on the private and third sector to invest heavily into the idea.  The benefits have to be clear and crucially workable to create new business opportunities and jobs, not simply move activity from one place into a more attractive one creating economic displacement.

Here is a VP of a manufacturing software company and a Southampton Chamber representative talking up the benefits of freeports.

The bad

But the immediate risk, if they work as proposed, is an uneven playing field, and exported goods may be hit with larger tariffs in some countries.  As we write this, it’s been discovered that 23 countries already have specific clauses in their trade agreement that do just that. Read this article at the FT about this latest blow.

Only time will tell how the revitalised perception of freeports tallies up international trade’s global realities. The marketing literature is undoubtedly impressive, and clearly, a lot of money is being spent making freeports look attractive to prospective investors.  We have been in meetings about our freeport in Felixstowe with our local Chamber.

However, nothing pops out as truly beneficial compared to what alternative customs options exist now post-Brexit. This is an important point I think which is missed by the press.  Of course, if we had a client that wanted to use a Freeport, we would help facilitate their requirements because this is what we do.  However, at present, Freeports are a mysterious and intriguing proposition that we are exploring from all angles.

Robert Keen from our trade association BIFA is pessimistic about the value of Freeports, see what he has to say as we believe this is one of the more informed views.

You could (and should) argue a good FTA would easily topple any ‘benefit’ from a freeport.  So maybe this is where the energy needs to be spent – to get better FTAs than the ones currently being agreed, which at the moment are generally continuity agreements.  After all, this is what Brexit promised us but has yet to deliver.

UK Chancellor Rishi Sunak, probably the biggest driver of the freeport resurgence, wrote a report in 2016 highlighting, amongst other things, what he believed were the employment benefits.  We dug out a copy here. It makes interesting reading and certainly seems compelling.  But now we’re finally here the examination and scrutiny in the real world, where the political landscape has changed significantly, has started.  And it needs a lot more than simply ‘believing’ in it, like what we experienced with Brexit (border friction was never negotiable).  When dealing with international trade, you merely have to stick to the cold hard facts because both parties need to end up on the same page.  Global Trade Review here illustrates what the parliamentary committee’s conclusion is so far.

The ugly

Then finally creeping in at the end, there is currently deemed a bit leftfield, but for the sake of inclusion (because you never know – remember project fear), these freeports will become Charter Cities. Essentially deregulation zones with low workers’ rights, tax havens for the rich and lots of dodgy stuff like money laundering, smuggling, etc.  Who on earth would want that?  See here for some intense reading about big data, private universities, global business and finance, billionaires, think tanks and governments involved in some grand-scale shift in global power that will change the world forever.  Don’t have nightmares…

So as freeports go live later this year, we’ll be keeping a close eye on developments and eager to see how the vision will be achieved.  For us here in Felixstowe, we are already seeing huge warehouses go up. We would hope planning laws are kept in check to negate any negative environmental impact on the area.  This is sleepy Suffolk, after all.  But with a freeport radius of 27km, locals should be on guard that development will probably intensify if the freeport model of success is to be achieved.  We would also hope the government provides an impact assessment for economic growth and job creation.

In summary, if we really can achieve ‘international hubs for manufacturing and innovation’, we need to do this to counter any negative effects, ironically, of Brexit. But whether we ever needed freeports to do all this in the first place is, of course, the question.

Watch this space.

This article is also available at Jordon.

RHA speaks out

RHA speaks out

19.5.2021 | Haulage

RHA speaks out

The RHA lobbies for HGV drivers to be added to UK shortage occupation list and launches tail lift guidance. 

RHA speaks out about the shortage of HGV drivers and publishes long-awaited guidance to improve safety around the use of tail lifts.

The RHA has urged ministers to add HGV drivers to Home Office UK Shortage Occupation List to help fix the growing driver shortage.

RHA Chief Executive, Richard Burnett told Grant Shapps that the Government needed to do more to help the industry recruit new talent as the driver shortage exceeds 60,000.

Haulage firms struggle to get access to Apprenticeship Levy money to fund training, and the shutdown of vocational driving tests last year saw a loss of more than 30,000 test slots. New IR35 tax rules have seen some firms cancel deliveries as they can’t get agency drivers.

In a letter to the Transport Secretary, he said the industry is facing a perfect storm and warned that a growing driver shortage will hit the supply chain and affect the Government’s plans to ‘build back better’ as hospitality opens up again.
“If we do not do something soon the industry will be unable to maintain the integrated supply chains and cope with artificial spikes caused by hot weather and the easing of lockdown, increasing demand for food and drink into supermarkets, pubs and restaurants and goods into retail outlets.”

The RHA has also launched its Tail Lift and Pallet Truck Guidance Document which aims to help operators reduce the risk of death and serious injury when palletised goods are delivered by vehicles fitted with tail lifts.

The guidance sets out industry best practice and supports businesses to review their health and safety processes.

It helps firms with establishing safe systems of work, risk assessments, staff training and support, incident reporting, equipment maintenance, and reminds employers of their responsibilities and is the culmination of several years’ work by the RHA, the Association of Pallet Networks, haulage and logistics operators, and transport law experts Backhouse Jones.

The Health and Safety Executive (HSE) provided technical support to the group as they developed the guidance which has been keenly anticipated across the haulage and logistics industry.

RHA chief executive, Richard Burnett said: “This guidance offers operators who move palletised goods essential advice to keep their staff and others as safe as possible.

“I cannot thank our partners in the working group and HSE technicians enough for helping us pull this document together that should make our working environments safer.”

HSE head of transport and public services unit, Harvey Wild said: “We believe that this guidance is an important step for the industry in improving the safety of tail-lift deliveries and we have provided technical support to the working group during the production of the document.”

Find out more about the RHA.

Freight 24 acquires W J Capper Transport Ltd

Freight 24 acquires W J Capper Transport Ltd

19.5.2021 | Logistics

Freight 24 acquires W J Capper Transport Ltd

Suffolk business progresses buy and build strategy.

 

Progressive logistics group Freight 24 has acquired Telford-based W J Capper Transport Ltd, a founding member of PalletForce. 

Graeme Connor, group managing director of Freight 24, says: “As a group, we’re delighted to add W J Capper Transport Ltd to our portfolio of companies.  Based in Wellington, Telford, they’ve been in business for the last 70 years and bring with them all the values of a successful family business –customer service, reliability, and a quality product range at a competitive price.”

 With the capacity to run 22 vehicles from its Wellington site, W J Capper Transport Ltd is one of PalletForces’ top UK performers.  Ross Bryant, group operations director, says: “This acquisition offers Freight 24 excellent foundations on which to grow the group over the coming years; already we’ve identified several opportunities local to Telford that we’re keen to explore.  These will then help grow the business and aid us with building our operating sites in Cambridgeshire and Suffolk.”

 This latest acquisition for Freight 24 takes the group’s forecasted turnover for 2021 to £10m+.  Graeme Connor continues: “With the expert knowledge of our advisors, we managed to complete the transaction with full due diligence in an impressive six weeks. This acquisition, along with other businesses that we have brought under the Freight 24 umbrella, including Imorex Shipping Services, helps build the footings for our long-term buy and build strategy. 

 “The purchase of W J Capper Transport gives us an excellent foundation on which to build and grow, and we’d be very interested to hear from any logistics businesses that are keen to sell to or join the group.”

For more information about Imorex visit imorex.co.uk

Forwarding set for sharp uptick in volumes in 2021

Forwarding set for sharp uptick in volumes in 2021

18.5.2021 | Forwarding

Forwarding set for sharp uptick in volumes in 2021

Following a year in which volumes tumbled, the market is expected to see strong real growth. 

Ti (Transport Intelligence) projects the market will grow by 11.6% in real terms (holding prices and exchange rates constant).

The fast rebound is in part a reaction to the decline in volumes last year. The air freight forwarding market experienced a severe contraction after air travel plummeted and procuring belly-hold space became extremely challenging. The initial economic downturn also had an outsized effect on air freight volumes. With manufacturing coming to a halt, the demand for air freight in just-in-time supply chains fell drastically. Despite being an early casualty of the crisis, the sea freight forwarding market experienced a less severe decline. The impact of lockdowns and other public health restrictions on consumer behaviours provided some respite for the market. It led to a shift towards goods purchases and away from services, which helped the market retain volumes. Recovery was seen during the second half of the year, as consumer demand, on the back of various country-specific fiscal support packages, bounced back.

The year ahead is instead likely to see much stronger volumes. With the vaccine roll-out starting to take effect in developed markets, the more favourable macroeconomic conditions are likely to allow for a strong recovery in the market. According to Ti’s COVID Recovery Tracker (CRT), the market is projected to be 1.9% larger in real terms than in 2019. The air freight market, projected to grow by 14.9% in 2021, has a less certain recovery, with the CRT indicating the market is expected to be just 0.7% larger than pre-Covid levels. The market will benefit from an inventory re-stocking cycle, where sales growth exceeds the rate of replenishment of inventories. This tends to lead to high growth in the air freight market as shippers use the mode to rapidly re-stock inventories to meet demand. With a 7.6% growth expected, the sea freight forwarding market is projected to be 3.5% larger than it was pre-Covid. The market has already seen signs of rapid recovery in some areas, notably on Asia-US trade lanes. The sky-high freight rates and extreme congestion that have recently characterised the market could hinder the recovery. However, in part, at least, these conditions indicate the strong underlying demand recovery in the market.

Over the medium term, the market is projected to grow at a real 2020-2025 CAGR of 5.0%. The air freight forwarding market (CAGR: 5.4%) is expected to see higher growth than the sea freight forwarding market (CAGR: 4.5%). Air will benefit from the inventory restocking cycle that started in late 2020 and continued strong demand in the high tech and e-commerce sectors. Typically, in ‘normal’ economic conditions, sea freight tends to grow at a faster rate than air freight. This is because there is more certainty around likely demand levels, enabling shippers to opt for less expensive sea freight services. However, the inventory re-stocking cycle due to take place in 2021 gives air freight a stronger 5-year growth rate projection.

The CRTs for 2025 show a slightly different take on the market segments. Given the depth of the decline in air freight in 2020, the CRTs for 2025 reveal that the sea freight forwarding market will look stronger relative to its pre-Covid position. The tracker shows the air forwarding market is projected to be 14.1% larger in 2025 in real terms versus the market size in 2019. Meanwhile, sea forwarding is projected to be 20.1% larger. Overall, this means the market is expected to be 16.7% larger than pre-Covid levels, showing a convincing recovery for the freight forwarding market.

Source: Transport Intelligence.