Following Rachel Reeves’ address to the Labour Conference, Dave Chaplin, CEO of contracting authority ContractorCalculator and Crawford Temple, CEO of Professional Passport, have reacted to some of what was she said.
Crawford Temple welcome Rachel Reeves reiterating her commitment to tackling tax avoidance and evasion, as well as her pledge to bolster HMRC’s capabilities by recruiting 5,000 additional compliance officers. He believes the focus on strengthening the tax enforcement system is crucial for addressing the £20 billion shortfall in public finances.
“However, while the recruitment of new officers is commendable, it’s important to note that HMRC already possesses powerful tools that can significantly aid in this crackdown,” he added. “Real-Time Information (RTI) and Intermediary Reporting systems provide valuable data that, when properly utilised, can swiftly identify suspicious patterns and potential tax avoiders and quickly close them down. The key lies not just in acquiring new resources, but in maximising the efficiency of existing ones.
“Enforcement remains paramount,” Temple continued. “Increased staffing must be coupled with a robust strategy for utilising available data and implementing stringent penalties for offenders. And, working in collaboration with recognised compliance bodies could further enhance HMRC’s ability to identify and restrict market access for scheme architects.
“By combining new resources with existing tools and focusing on swift, effective enforcement, we can create a more equitable tax system and recover much-needed funds for our public services.”
Commenting on Reeves’ plans to crack down on zero rights contracts, Dave Chaplin, CEO of ContractorCalculator commented:
“Whilst I welcome any move to protect any vulnerable worker who may feel exploited, it’s crucial that the Government strikes a balance that also respects and preserves the rights of self-employed professionals who have chosen to work for themselves.
“The self-employed are typically not vulnerable workers and have entered into commercial contracts willingly with their clients,” he said. “It’s important that any new legislation recognises their right to be their own boss and doesn’t unnecessarily curtail their freedom to operate.
Chaplin says the current off-payroll tax rules have inadvertently created a “zero rights” situation where some freelancers are being taxed as employees without receiving corresponding benefits and protections. This discrepancy needs addressing to ensure fairness in the system.
“A potential solution could be to automatically trigger employment rights when a contractor is classified as “employed for tax purposes.” This would eliminate the need for individuals to go through lengthy and costly employment tribunal processes to obtain their rights.
Chaplin concluded: “While protecting vulnerable workers is paramount, it’s equally important to unshackle the UK’s freelance professional workforce and allow legitimate self-employed individuals to conduct business freely and contribute to the economy unhampered by more legislation and more red tape. I hope that Labour takes this on board.”
