The independent Office of Tax Simplification (OTS) have published a paper 'Platforms, the Platform economy and Tax Simplification' this considers the case for a new tax deduction system for workers who provide their services via online platforms. A key suggestion being, that platforms could deduct tax at source.
- Innovative online platforms have created new methods of working together with new methods for workers to sell their services.
- Statistics inform us that platform workers are more likely to work in professional occupations than they are to be a taxi driver or goods delivery driver.
- The self employed pay less NI than employees and this means that workers will tend to self assess themselves as self employed if possible.
- The government proposed a rise in NICs for the self employed in Spring Budget 2017 however hostile newpaper campaigns forced it to make a u-turn.
- The number of people claiming self employment are rising year on year.
The OTS is now exploring whether there is an oppportunity to create a new tax deduction system that can be operated by the platform without having to consider a worker's employment status, this will make tax administation easier for workers.
The new system would presumably mean that no one has to self assess IR35 and would operate in a similar way to construction industry deductions.
In summary the OTS suggests that:
- Government consider the case for enabling platforms to operate a system equivalent to PAYE for self employed platform workers (without affecting their employment status)
- HMRC continue to focus on the development of guidance and to ensure that this is readily available and targeted – especially at people who may unknowingly generate tax liabilities
- HMRC consider how best to facilitate technology developers and others to provide reassurance to the burgeoning self employed that digital applications are fit for purpose in submitting accurate data and returns as necessary
- HMRC consider to what extent they can play a role, in partnership with the software industry, in facilitating the creation of an app to help self employed people manage their tax affairs
Comment
The report is well worth a read if you have the time.
We are now awaiting the outcome of the government's Consultation on employment status following the Taylor Review of Modern Working Practices, neither of which consider IR35. The vexed problem of IR35 is being considered in the open consultation, Off-payroll working in the private sector (this closes on the 10th August)
