I regularly watch the updates on IR35 via Social Media from key players such as Dave Chaplin and Mike Gibson. The work that they do is excellent and it is of course exceedingly frustrating for all parties that seemingly little progress has been made. I say that, not as any criticism of those involved, but because the IR35 issue has been around for so many years now; it’s a never ending saga with many battles in the overall war with no end in sight.
But is IR35 really the problem or just a symptom? Surely the UK needs a flexible workforce? How can major projects be delivered without flexibility in the workforce? Does the IR35 debate need to be widened to look at the ways that organisations want to engage with their workers; especially for technology lead or legislative projects which are vital to ensuring that the UK remains competitive?
It’s the power of large organisations working as a collective that will raise the profile of this issue with the Government. Large organisations need to persuade the Government that it’s their problem to make sure that there is a workforce which is allowed to work on a flexible basis, if they agree to do so, without the fear of being penalised by an uncertain tax regime. Furthermore the flexible worker should not be penalised by paying tax as if they are an employee with full employment benefits. The flexible worker isn’t protected from immediate redundancy, often gets no sick pay, holiday, paternity or maternity and has to provide their own pension.
If IR35 is reformed and all workers are put onto PAYE then surely full employment rights must follow. To do anything other than this is “having your cake and eating it”! If the country wants, or needs, a flexible workforce who takes all of the risk with no associated employment rights then there should not be an expectation of taxation in the same way.
IR35 is unfair but that unfairness is seen differently by those who contract and those who are taxed under PAYE. Frankly I have sympathy for both points of view. Moreover it’s the overall system of taxation that is unfair. If IR35 is to be reformed, then isn’t the solution to have one system of taxation where those who get the security of employment rights pay more and those who don’t pay less.
So many people do not like taxation. The number of people I hear from these days who want to “avoid” paying tax, reduce their tax bill or think they have devised some whizzy scheme to evade tax is unbelievable. Worse still is that “tax evoidance”, to quote a Paul Lewis saying, is getting worse probably as a result of the blatant abuse of the tax laws by those with a lot to gain.
Fit for purpose tax system
Public services (education, health, roads etc) need to be paid for regardless of the Taxation pot that they may come from. The whole system needs to be much simplified to a base level of taxation suitable to encompass the numerous channels of income that many have these days; employment, self employment, pension income & drill downs, renting property, investments, savings, AirBnB, online selling and so on. Long gone are the days when everyone was on PAYE with a job for life. Just when was the system of taxation last examined to see if it is fit for purpose?
Maybe the result will be a base level of taxation with more tax brackets (not just basic, higher and additional) and starting at a higher level of earnings to eliminate the plethora of complex reliefs which have cropped up over the last few years. Who knows what the answer will be. But the whole system needs to be fair across the board with a simple, easy to understand system that allows people to continue to self assess their income on their tax return. Eliminate the complexities and stop tinkering around the edges putting a finger into the hole of the next issue which springs a leak in the UK system of taxation.
The time has come for revolution of the tax system not evolution.
It’s not all about IR35; it’s about making the tax system fit for 21st century income generation. Making it fair for all.