Training is the first to go ...

Once upon a time we used to hold training courses based on our book. Sometimes we'd do it for a single company, who'd provide enough people and a venue, and sometimes they were open to anyone. It was a fairly modest affair but even that stopped when the recession hit. So we don't offer it any more although we now have an online course providing an introduction to managing a digital interactive project.

With this in mind I was pleased to hear about the initiative by BIMA and TIGA, trade bodies for the digital creative industries, asking for the government to introduce tax breaks for small companies to invest in their talent by training it. To quote the BIMA blog:

We believe the launch of a pilot SME Training Tax Relief (TTR) scheme to promote skills, training, and productivity is vital to support the future of the creative industries, a sector worth £71.4 billion a year to the UK economy.

How might such a thing work? After all, what your company spends on its business can be offset against tax already can't it?

There have been tax initiatives to help research and development for a while now, and they presumably provide a model. The basic idea is that for every pound you spend on whatever the scheme applies to, you can claim more than that amount against tax. For example, to quote HM Revenue and Customs ...

The tax relief on allowable R&D costs incurred on or after 1 April 2012 is 225% - that is, for each £100 of qualifying costs, your company or organisation could have its Corporation Tax profits reduced by an additional £125 on top of the £100 spent.

There is a similar arrangement should you be making an accounting loss during that particular financial year.

This makes such a scheme attractive financially to a company. Clearly there will be strings attached. For example, in R&D, any intellectual property from the R&D has to belong to the company. With training you might find that it is a condition that anyone trained remains employed with the company for a certain time, so that both the employee and the company benefit from the training. As a slight aside, it has been suggested that training costs should be treated as a capital cost rather than expenditure, since the benefit can be seen to last well beyond the immediate period. At the moment, since as a small company you can offset 100% of capital costs (up to a limit) that wouldn't necessarily be a problem, but the revenue have said that such an interpretation would be 'difficult to imagine'. (See the document linked below.)

For the company, any tax relief will ameliorate the double whammy that (superficially) training staff has: you lose productive staff time and you have to pay for it. But training, especially if the courses include people from outside the immediate working environment, has additional benefits; bringing people together. It's the same with conferences: the time spent socialising is as important as the time spent in sessions.

A final hope, from me for obvious reasons, would be that online training would be eligible for tax relief as well as face-to-face training. This would be by no means a given, based on past experience, but for many activities such as programming, online training can be particularly productive.

As a final note, you should read this document from the revenue:

Sometimes, the government gets suggestions that employers should be given tax relief for the costs of training their employees. That surprises us, since except in cases where the employee has some link with the employer outside the employment itself, the disallowance of expenditure by an employer on staff training and development will be extremely unusual indeed.

See ... even the tax man says you should go for it!

[PS: Full disclosure ... I used to be Chair of BIMA]

Staff or non-staff: that is the question

The balance between staff and freelancers keeps bubbling to the surface. Many moons ago we discussed freelance culture and the IR35 rules that related to people working as if they were employees of an organisation but through their own service company. MPs on the UK public accounts committee have recently complained about how many people in public service are paid through service companies but this good analysis on the BBC web site points out that it's usually the contracting company who benefit rather than the contractor. And it doesn't even go into the extra accounting costs of running a company!

The question of whether using freelancers is inherently good for business is an interesting one and brings us to another use of our term iProfessional ... as follows ...

The IPro Index is a landmark research study conducted by Monash University and sponsored by Entity Solutions about the contract workforce in Australia.

In this case the I stands for Independent rather than Interactive and the basic message is For instant productivity, engage a white collar contractor, as Entity explain on their blog. The study is wider than information technology but is definitely worth a read. You'll have to register for an email link.

Just what constitutes a 'freelancer' can be unusual as well. The most unusual I've come across is to break a software task into components that are run as competitions: code crowd-sourcing. This is the basis of Topcoder and there are currently over 430 thousand members of the community working on projects for people like DARPA, NASA and Intel.

So now not only can your processing and storage be in the cloud ... your workers can be as well!

The Freelance culture - what it can mean for your project

How many of us employ freelancers on our projects? In iMedia it seems to be quite the norm to supplement the team with extra skills from the freelance pool. We should admit that we can’t work without them. But with their non-conformist, free-spirit culture do they fit in with a team ethos?

iMedia development needs a mix of skills, creativity, technical know-how, hard-graft, attention to detail, time sensitivity, business nous, market awareness and project management. It’s a project development activity that cries out for a team of people. Quite often the client wants something that makes a difference whether in look or feel, and a team that has gelled through working together can operate more efficiently but may lack the spark of difference. This is what a new member may bring. Will the existing team squash or embrace the newbie freelancer? Will you? Will your management?

The interface between employees and freelancers has not been the focus of much attention when it should be. It poses risks and benefits that need managing sensitively.

The good news is that iMedia freelancers along with general creative freelancers have a pool of resources to help them. They have become more professional, tap into one another and listen to advice from more experienced freelancers. It is not the isolated black art it used to be and we can’t relate to it like that any more. Perhaps it’s time to reappraise it. Take a look at the analysis from an experienced freelancer, Jacques van Heerden, who explodes 5 myths in 5 freelance myths busted from the start. Do any of these myths reflect your attitude/ your company’s culture?

To understand freelancers better, why not take a look at how they need to relate to contracts that you may offer them. Often companies just have standard tweaked contracts for freelancers and it can cause a lot of trouble when they query them. But they do so with very good reason and we need to employ them so we should do it right, shouldn’t we? Hopefully you have recourse to legal advice and after reading 10 things to be wary of when signing a consultancy contract, by James May, from the interesting FreelanceUK site, you’ll be able to read your own company freelance contracts with a bit more appreciation.

The 10 points here relate to the IR35 tax regulations where if freelancers are not seen as sufficiently independent in the revenue’s eyes, they will be treated as employees when it comes to tax and national insurance. This could be detrimental to the contractor but it can also have knock-on effects for the company who hires the freelancer, and these can be applied retrospectively. Remember this only relates to IR35 and the ‘employment’ position but of course there are other issues that need to be addressed in a freelance contract, such as intellectual property and liability.