By Lyndsey Hall
August 2014 Update: PCG is now IPSE
The Chancellor announced on Thursday that he intends to raise an extra £9bn over the next 5 years by countering “tax avoidance, tax evasion, fraud and error”. According to the Autumn Statement on Thursday, the new rules, which are yet to be announced, will take effect from April 2014, and could raise up to £400m a year for the Treasury.
Osborne declared: “We are going to tackle the growth of intermediaries disguising employment as false self-employment, depriving workforces of basic employment rights like the minimum wage in a bid to avoid employer National Insurance.”
On Thursday, the Professional Contractor’s Group (PCG)’s Director of Policy and Public Affairs, Simon McVicker, showed concern regarding the Chancellor’s announcement, criticising the Government’s previous attempt to amend legislation applying to contractors, and the introduction of IR35, which he called “a confusing and inappropriate measure that has affected many thousands of legitimate micro-businesses.”
Now, the PCG has received clarification from HMRC that these measures will not target the legitimately self-employed. A spokesperson for the Revenue stated: “We wanted to clarify that the measures are targeting mass-marketed schemes, where workers can be moved en masse into self-employment, even though they should be employed. Often the workers are low-paid and unaware that they are being engaged on a self-employed basis until they try to claim employment rights. The measure is designed to stop this from happening.”
McVicker was reassured to hear this: “It is comforting to hear that the measures will be confined to a specific problem area and will not affect legitimately self-employed contractors and freelancers. It is also very encouraging to see HMRC engaging in clear and open dialogue with the bodies that represent freelancers and small businesses in order to clarify the situation so quickly.”
According to AccountingWeb, we can expect to see draft Finance Bill 2014 clauses this week.
As a PCG accredited accounting firm, we at Knowles Warwick were pleased to hear that legitimately self-employed contractors will not be penalised by the new legislation.
What do you think about the Chancellor’s latest anti-avoidance scheme? Let us know in the Comments.