Ai vs. legacy industry

Artificial intelligence is undoubtedly a growing segment of technology and society, but history shows that technological advances don’t eliminate the need for work, though they can shift its pattern.

This applies to agricultural production. In the UK, more than 20 per cent of the workforce was employed in the agricultural sector at the turn of the 20th century, while today, thanks to mechanisation, less than one percent work in agricultural roles. However, that small group produces vastly more food than their predecessors a century ago, which is a clear benefit to society.

Ai is likely to drive other significant productivity gains too, and that should also feed through into the cost of providing some public services. However it’s difficult to see many inroads being made into the welfare bill, particularly if fewer working hours per capita lead to the introduction of a Universal Income paid by governments to their citizens.

Taxes & a need for change

If income tax receipts should fall as automation rises, there are a number of levers governments can pull to push up tax revenues, while other existing taxes may have to pull more weight.

Consumption taxes like VAT could be hiked, and if people are working less then they may have time to consume more, which would swell coffers from this kind of taxation even without a rise in the headline rate.

Taxes on business or wealth could also enter the equation if governments find the rise of the robots opens up a black hole in their budgets.

Alternatively, new taxes may be introduced which directly tax automated production, or the gains made by owners of that production.

Indeed, the UK is now forging ahead with a digital sales tax which shows some governments are not simply going to give technology a free pass when it comes to contributing to the tax take. However, ti should be noted an alliance of Ireland, Sweden, Denmark and Germany blocked the proposal in Brussels for an EU digital sales tax on 29 November 2018.

Why Ai could spur a change in taxes

Artificial intelligence will undoubtedly deliver progress in many important areas, particularly in health care.

The accountancy firm PwC reckons that UK GDP will be around 10 per cent higher in 2030 as a result of the Ai revolution, mainly through its ability to drive consumption by the production of better and more tailored products. In the long term the impact of Ai is likely to be bigger yet, and the tax system will have to adjust accordingly.

It’s too early to call how this will happen – however, one thing we can be relatively sure of is that different models will be adopted across the globe, as political ideologies feed into the equation.

Laith Khalaf

Laith Khalaf is a senior analyst with Hargreaves Lansdown and has worked for the retail investor platform since 2001, after graduating from Cambridge University.

His research encompasses funds, markets and investment trends.

Laith is a well-known commentator and frequently features on television and radio, as well as in the national press.

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The company has has been named an Approved Supplier by the employment industry recognition scheme, Professional Passport, the compliance and risk management firm, which offers  solutions to the temporary workers market place.

ePayMe has also revealed it has become an affiliate member of the Association of Professional Staffing Companies (APSCo), which operates as an international trade association for the recruitment industry.

Through providing specialist payroll support for recruitment agencies and for contractors – an area which is becoming more complex and more regulated as time goes by – ePayMe tells IMS StratNews that it is currently exploring a range of industry accreditation schemes to ensure it, and the contractors and agencies it works with, continue to follow best practice.

WHAT DOES THE PROFESSIONAL PASSPORT MEAN FOR ePAYME?

The Professional Passport accreditation scheme involves rigorous auditing of ePayMe’s service levels, in-house systems, work practices and staff training.

Combined with the APSCo affiliate membership, this means that ePayMe has been recognised for exceeding the standards required by Government departments of any company involved in supplying employees or contractors.

Alongside the ‘stamp of approval’ from APSCo, ePayMe will also now be able to participate in networking events alongside leading professional staffing agencies within the UK.

WHAT ePAYME SAYS

Sarah Johnston, managing director of ePayMe, says: “The fact that we have successfully gained the Professional Passport accreditation is a testament to the hard work and dedication of our team.

“We have elected to join APSCo after gaining this accreditation to further cement our commitment to clients, especially those within the education sector in support of the CCS framework (Crown Commercial Services). We are excited for the coming months and meeting more fellow APSCo members, attending events and helping members to grow and thrive.”

WHAT APSCo SAYS

APSCo Global CEO Ann Swain added: “APSCo is delighted to welcome ePayMe into its affiliate membership, and we are looking forward to representing, promoting and supporting their brand now and in the future.

“All of our affiliate members have to commit to a strict Code of Conduct and a rigorous, independently verified, referencing process before they join. As such, APSCo affiliates provides a valued stamp of best practice, quality, integrity and expertise.”

“Additionally, the Professional Passport accreditation means agency and end client members who use ePayMe are covered by the organisation’s unique 5 mln stg debt transfer liability insurance.”

THE FUTURE BENEFITS OF THE PASSPORT FOR ePAYME

ePayMe’s Johnston adds: “[The] Professional Passport aims to provide industry-recognised standards for service providers, agencies, end employers and contractors within the recruitment industry. At ePayMe, we fully support their efforts to create a level playing field and raise the level of professionalism within our industry.

“With our market becoming ever more complex and new rules and regulations being introduced all the time, it’s vital that we all pull together to ensure best practice in everything we do.”

ePAYME AND BEST PRACTISE

Membership of a recognised trade body and proof of best practice are now required by any services provider operating within the Public Sector.

Many of the contractors who use ePayMe’s services work in nursing and education, areas which are covered by rules and framework agreements stipulated by the UK Government’s procurement agency, the CCS:

These aim to make it easier for smaller suppliers to bid for government work, while ensuring that everyone in the supply chain adheres to best practice.

At the same time, Her Majesty’s Revenue and Customs (HMRC) is cracking down on what it sees as tax avoidance, and is scrutinising many of the business practices within the recruitment industry, including the use of ‘umbrella companies’ and what it considers to be ‘fake self-employment’.

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Mark Tighe, the CEO of specialist tax relief firm Catax, talks to IMS StratNews about Research and Development tax relief.

 

Let’s start with the basics of Research and Development.

Despite Research and Development (R&D) tax relief being introduced at the turn of the Millennium, the reality is that significant confusion remains over which businesses are eligible and what they can actually claim for: R&D tax relief is a form of government subsidy, designed to encourage greater investment and economic growth in the UK, by stimulating innovation.

 

And to put it simply, any business of any size and in any sector can qualify for Research and Development tax relief.

 

 

So long as a firm has developed a new product, service or business process in the past two years, they could be unknowingly missing out on these lucrative government tax breaks on work they’ve already done.

 

 

The time taken, materials used and other money spent are all potentially eligible.

 

 

Crucially, the innovation does not need to be successful for it to qualify for the relief.

 

When executives aren’t up to speed on Research and Development

If I had a penny for every time a CEO bet me their firm wouldn’t qualify for Research and Development tax relief, I would be at least £50 richer. This relief should not be seen as some mythical pot of gold at the end of a rainbow that only large corporations, employing a retinue of workers dressed in white coats, can reach.

 

 

The truth is SMEs are just as likely to qualify, and are even able to claim a higher rate of relief than larger companies.

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Granville Turner, a director at Turner Little – the corporate services  provider – focuses on the tax and residential status implications for such companies; detailing for IMS StratNews just what impact this has on the tax liabilities for those companies and individuals involved.

Here information is presented in the form of a straightforward  guide. It provides clear details for Non-UK resident shareholders and directors just what requirements need to be met to ensure they are complying with UK government company – as well as individual – residential and taxation status rules!

Determining a company’s residential status

The general rule is that a company is a UK resident if either:

• It is incorporated in the UK, or 
• If the central management and control of its business is in the UK.

Therefore, a UK incorporated company will be defined as a UK resident, irrespective of having foreign directors and shareholders, says Turner. 

When special conditions apply to residency and taxation complexities

To find out more about Non-UK resident shareholders and directors taxation complexities see our guide via our ‘Gold Membership’ at https://www.imsstratnews.com/non-uk-resident-…rs-company-taxes/

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The firm is an exciting automated smart business current account, built for the unique needs of freelancers and self-employed people.

It offers this group the accounting tools they need to manage taxes, stay on top of expenses and get paid on-time! 

The app-based company’s smart current account combines banking, accounting and tax services designed specifically for this area of the UK’s fast-growing workforce, including the so-called ‘gig economy‘.

Coconut launched its iPhone app for sole traders on 31 January 2018, and has since opened 2,500 current accounts with £10 mln payments processed.

In September 2018 it also pre-approved its first Android customer, and says it continues to build features to support sole traders; in addition, it is developing tools aimed at including in the future limited company contractors.

The company is backed by leading tech accelerator, Techstars, and is one of the ten winners of the Nesta Open Up Challenge; a competition which awards prizes to innovative businesses using new Open Banking APIs.

Who is Elaine Clark?

Elaine Clark created the Cheapaccounting.co.uk franchise, which was established to make small business accounting as efficient and cost effective as possible.

Coconut says she brings a wide range of experience to the firm, which will help it build additional tools perfectly suited for those accountants who support these customers.

Elaine Clark tells IMS StratNews:  “I’m really excited to be working with the Coconut team, as they build out the accountancy offering of their product.

“I think the convergence of banking and accounting will be more transformative than cloud accounting was 10 years ago; we want accountants to be able to harness the full potential of technologies like machine learning, to enable them to better service their clients – while also improving margins and allowing them to grow their practices.

“Coconut will soon allow them to do this in a single tailored product.”

Clark also adds that Coconut is building a community of accountants in a Facebook group called Coconut Partners: “In the same way that customers have been a driving force in the development of features, they aim to do the same with the accounting community”, she says.

What Coconut says

Sam O’Connor, co-founder and CEO at Coconut, says, “Coconut is bringing banking and accounting together to eliminate business admin for self-employed people and small business owners. But we want the accountants our customers work with to also benefit from real-time bookkeeping and rich data, because this saves everyone time and money.

“Ninety percent of businesses in the UK are owner managed and 90% of the growth in small companies since 2001 are non-employers.

“These businesses tend to have simpler requirements than bigger businesses, but the products out there are complicated and dated, so haven’t kept up with the shift in the market.

“We think that these businesses, and the accountants that support them, need access to the most advanced technologies, and Coconut will provide this in a tailored product.”

By Ingrid Smith, Inhouse Editor

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