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CIOT cautions against false self employment rule changes

Possible changes to the way the Government investigates cases of false self-employment has left a sour taste in the mouth of the Chartered Institute of Taxation.

The CIOT feels that the new rules could be much too harsh if they are implemented as they stand, though the organisation did acknowledge that false self-employment as a method of tax avoidance is a serious concern. The problem the CIOT has with the proposed regulatory changes is that the definitions for false self-employment might be too loose, which could lead to actual contractors and freelancers – real folks that are indeed self-employed – to be raked over the coals unfairly.

So what precipitated the Government’s proposed law changes? Well Her Majesty’s Revenue & Customs recently launched a consultation on how to stamp out the practice of employers purposely mislabeling their employees as self-employed in order to reduce their National Insurance contribution payments. Employers also have less responsibilities when it comes to workers’ employment rights in the same situation, and that can also reduce a firm’s outgoings as well.

Now I’ll be the first one in line to say that HMRC hasn’t always been the best-equipped to make the right decisions when it comes to policy enforcement. In fact I’ve been taking the piss out of the taxman for months and months for their indecipherable guidance documents and somehow incomprehensible policy decisions, but I have to admit that HMRC does have its heart in the right place, even while sometimes it seems to have its head up its arse. I’m wondering as well as CIOT if the new focus on stamping out false self-employment is going to be successful or a bloody disaster, and can only caution the tax authority to take a careful and measured approach to the issue.

However, if the way the Government has handled the IR35 issue is any indication, this is going to most likely persist in being a complete and total mess, despite HMRC’s best intentions. Pressure from ministers to squeeze the British taxpayer for every last penny is obviously forcing the taxman’s hand in this situation, but eventually the money’s going to run out if you keep harassing self-employed Brits instead of going after multinationals that have been flouting their tax responsibilities for years!

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