Posted by Bishop Fleming on July 18, 2017
Top 40 accountants Bishop Fleming are calling on the government to provide greater clarity on employment law and taxes in the light of a new report into the gig economy.
The firm says the report by Matthew Taylor into modern working practices is a signpost to a “long-term rethink” on how employment status is determined and how employees and the self-employed are taxed, but doubts this will happen due to the Brexit-heavy programme in Parliament.
Andrew Browne, Head of Tax at Bishop Fleming, said that whilst the government-commissioned report was “pretty meaningless” without any ministerial commitment to take it forward, what was really needed was a fair and simple system that is clear on how a worker can determine whether they are employed under a contract of service or working for themselves.
The Taylor Review of Modern Working Practices recommends creating a hybrid worker called a “dependent contractor”. Where such a worker is supervised and controlled, they would be entitled to employee rights such as sick and holiday pay, but would not be an employee.
Mr. Browne commented: “The knotty question of whether someone is employed or self-employed is already a conundrum, made even more complicated this year for organisations in the public sector forced into applying a hundred years of employment case law to determine if a worker is caught by the ‘disguised employment’ IR35 rules. And now the Taylor Review wants to muddy the waters even further with yet a new category of ‘dependent contractor’ that is neither one thing nor another.”
Currently, “employed” and “self-employed” categories exist for tax purposes, and an extra class of “worker” occurs in employment law. The Taylor Review refers to the increasing number of Employment Tribunals cases as evidence of the need for reform.
The Bishop Fleming partner added: “Any attempt to increase the complexity of employment and tax law is anti-business and severely hampers the UK’s post-Brexit competitiveness. We have one of the most flexible labour markets in the world, and the last thing we need to do is to make the law even more confusing than it already is.”
Mr. Browne points out that the report’s call for a new category of worker, with the inevitable additional tax and legal rules to back it up, is a contradiction to another of the report’s key recommendations that government avoids further increases in the non-wage costs for business of employing a person.
He added: “What the economy really needs are labour laws that are both clear and accessible to all.”