Hello, 

We have launched our coronavirus Self-Employment Income Support Scheme (SEISS) tool this week for the first stage of testing with unrepresented taxpayers. So far so good, everyone gets the basics. There is an enhanced version in the pipeline for those who struggle with averaging.

The House of Lords' final recommendations on its review of Off-Payroll Working might raise the odd eyebrow. It suggests that HMRC scraps IR35 in favour of ‘one of the simpler, less burdensome alternatives'. Having followed this topic closely for many years I must admit that I struggle to find anything simpler than deduction at source. Perhaps though a statutory employment test is the means to the final end. The Statutory Residence Test works well for determining tax residence, and it really is a tough call for HMRC to design a 'check employment status tool' that takes into account every single judge-made decision on employment status, there are so many decisions. And what else do with the Lords' request at the end of the report? They go on to recommend that the government design a 'short-term means of raising revenue that will not prove burdensome for businesses as they emerge from the COVID-19 pandemic'. I wonder what on earth they mean when they say, "will not prove burdensome".

The House of Lords committee was heavily lobbied by anti-IR35 groups and their report does not consider the wider impacts of the use of abusive tax avoidance schemes which have been such a fundamental feature of the contracting market over the last two decades and ultimately have to be the reason for the introduction of the extended Off-Payrolling rules. HMRC, whether by coincidence or not, has published the results of research conducted into that aspect this week too. That makes interesting reading: in total contrast to the Lord's review.

If you have any tax-specific queries, please post them up to our sister site, details are here: www.VtaxP.co.uk

Back soon

Nichola Ross Martin FCA CTA (Fellow)

Tax Director

www.rossmartin.co.uk

Your Virtual Tax Partner® online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.

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Comments (1)

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IR35 is all about maximising tax revenue to feed an insatiable state machine, and nothing at all to do with fairness. Many moons ago Justice Park nailed it when he said that HMRC would have the whole world on PAYE if it could.
A wider view would...

IR35 is all about maximising tax revenue to feed an insatiable state machine, and nothing at all to do with fairness. Many moons ago Justice Park nailed it when he said that HMRC would have the whole world on PAYE if it could.
A wider view would be that as we venture out into a post EU world, we need to be as competitive as possible. That means allowing businesses and individuals the opportunity to be as flexible as possible. Self employed status can suit both business and individual - most IR35 cases involve HMRC deciding that they know better about that arrangement than either of the parties involved, and seeking to impose their own view on 2 third parties, purely for their own ends. They then managed to drag these cases out for over 10 years in some instances. The inherent uncertainty in that position for both contractor and sub-contractor is what drove the avoidance schemes. It had very little to do with increased returns. And for their desire to manage their own affairs, HMRC decided to extract vengeance through retrospective legislation.
Far better to allow people to come to their own arrangements. Employment suits some positions, and some people, and self-employment others. Just because the government wants something doesnt mean we all have to roll over all the time. Unfortunately, we seem to have become cowed into accepting that the state runs our lives, and can do what they like.
Rant over.

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