As per Sir Robert Buckland (former Lord Chancellor):
The Summer offers an important
opportunity for policy development ahead of next year’s General Election
and Conservative manifesto. As the Prime Minister has rightly placed
economic growth as one of his five priorities for this year, we need to
raise our eyes to the horizon and plan for the Britain of 2029. The
need to offer a way forward for self-employed people and small
businesses is clear.
Last
year’s Growth Plan has been consigned to political ignominy but, despite
its flaws, it did contain some promising and sensible policies. One
such policy was its proposal to “take the complexity out of the tax
system” by reforming off-payroll working rules – more commonly – and
controversially – known as IR35.
While
nobly intended to tackle tax avoidance by contractors who work as
employees, the legislation’s burdensome and complex nature mean it has
become something of a Frankenstein’s monster. The deleterious impact it
has had on dynamism, entrepreneurship, jobs, and growth means that
there is no better time to slay it once and for all.
One
of the most immediate problems with IR35 is the treatment of
contractors as “disguised employees” for tax purposes. This discourages
independent professionals from taking on projects and limits their
ability to negotiate terms and work arrangements freely. The resulting
lack of flexibility stifles innovation and prevents enterprising
individuals from operating in a way that allows them to realise their
full potential.
A
double-edged sword, IR35 places a corresponding administrative and
financial burden on businesses that engage with contractors. Companies
are required to assess the employment status of each contractor they
hire, often leading to costly investigations and legal disputes. The
ambiguity of the rules makes it difficult for employers to make accurate
determinations, strengthening the chokehold they have around
businesses.
The
cumulative effect of IR35 is that contract work has become less
desirable, with some opting instead for permanent employment or work
outside the United Kingdom. It is often said that diversity is a great
strength, and in no context is this truer than in a modern economy like
ours. The drying of the pool caused by IR35 has restricted the ability
of British employers to fill crucial skill gaps, while we have lost out
on homegrown talent to more competitive economies.
The
reform of IR35 would not just add substance to the Prime Minister’s
second priority of growing the economy, it could form a key plank of the
Work and Pensions Secretary’s laudable mission of getting the
economically inactive back to work. The scale of the challenge of
bringing the once-employed back into the workforce post-Pandemic means
the country simply cannot afford the barrier to enterprise that IR35 has
become. Indeed, my role leading a review into how Government policy
can boost the employment prospects of autistic people has impressed upon
me the importance of empowering those with the ability to work to take
the leap and do so.
With
the next General Election fast approaching, another look at the
off-payroll working rules would be an act of political expediency. The
onerous regulations hit a natural constituency of the Conservative
Party’s hardest, and its support will be crucial for Conservative
prospects come next Autumn. As the Labour Party increasingly positions
itself as the party of business, it would be foolish not to review IR35
as part of the party renewing its appeal to natural supporters.
It
is time to reshape and rethink regulation surrounding the engagement of
contractors, paving the way for a form of taxation that encourages
dynamism and flexibility at a time when growth has never been needed
more.
Tax does have to be taxing.
Tax Investigation Insurance
Market leading tax fee protection insurance for businesses, sole traders and individuals. Protect yourself from accountancy fees in the event of an HMRC enquiry.
Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.
You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.
Tax Investigation Insurance is an insurance policy that will fully
reimburse your accountant's (your tax return agent) fees up to £100,000
if you are subject to enquiry by or dispute with HMRC.
A Solar Protect policy will enable your accountant (your tax return agent) to:
-
Deal with any correspondence from HMRC
-
Attend any meeting with HMRC
-
Appeal to the First-tier Tribunal or Upper Tribunal
-
Having the security of knowing that fees will be met in full will
enable your Accountant (your tax return agent) to defend your position
robustly
Please click here for details.
HMRC Is Shite (
www.hmrcisshite.com), also available via the domain
www.hmrconline.com, is brought to you by
www.kenfrost.com "
The Living Brand"
