In recent years work status compliance issues have rarely far from a Chancellor’s statement and this year’s Autumn initiative was no exception. Dave Chaplin, CEO of IR35 Shield gave his assessment of the ideas and initiatives introduced: “Jeremy Hunt today claims he focused on growth. If he is so focused on growing the economy, he should have unshackled the UK’s flexible self-employed workforce by repealing the unworkable and deeply flawed Off-payroll legislation,” said Chaplin. “The Tories failed the self-employed by allowing HMRC to push the damaging off-payroll reforms through Parliament, which harmed the people who facilitated growth and gave the UK an edge.
Chaplin noted that the Government has confirmed that a long overdue fix will happen in April 2024, eliminating the double taxation flaw that has seen contractors and firms paying combined tax rates over 100%. However, he said, “a legislative lick of paint doesn’t help rev up the economy. Off-payroll has been a non-runner from the outset.”
Chaplin did welcome the Chancellor’s decision to reduce taxation on self-employed workers operating as sole traders: “It was an important acknowledgement by the Chancellor that will support a key group of workers who do so much for the UK economy,’ he noted.
Crawford Temple, CEO of Professional Passport, saw an added issue with these tax breaks saying that the move “could put increased pressure on the umbrella market where we could see an increase in the use of false self-employment models. That risk will require greater enforcement by HMRC across the sector to prevent further market distortions. The decrease in Employee National Insurance to be introduced in January by 2% will also be welcome news to umbrella workers who will see more money in their pockets.
“We also noted in the detail that the government is legislating in the Autumn Finance Bill 2023 to introduce tougher consequences for promoters of tax avoidance schemes,” added Temple, “these include a new criminal offence for those who continue to promote avoidance schemes after receiving a notice requiring them to stop; and a new power enabling HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance, including those who control or exercise influence over a company.
“These are nice words full of good intentions but they need to be supported by effective enforcement action which has been sadly lacking across the sector,” said Temple. “HMRC has access to all the data it needs to identify the criminals peddling these schemes quickly and if HMRC also worked more closely with the accreditation standards bodies it would further limit their access to the markets.
“Tax avoidance is costing the Treasury millions of pounds each year which our economy can ill afford,” he concluded.
