MPs challenge Treasury to Stop the Off-Payroll Tax in the House of Commons
Two MPs have challenged the Treasury over it’s controversial plans to extend the Off-Payroll Tax, the IR35 rules, to the private sector, in the House of Commons today. Jo Johnson, Conservative MP for Orpington and Paul Sweeney, Labour MP for Glasgow North East both asked questions in Treasury Questions criticising the Off-Payroll Tax and calling on the Government to change course.
Having imposed the Off-Payroll Tax – the ‘off-payroll working rules’ – upon the public sector, HMRC is intent on enforcing a private sector rollout. This is despite the impact of the reforms in the public sector, which demonstrated its crippling impact on public sector projects and industry as a whole.
Both MPs called for Government plans to roll-out The Off-Payroll Tax to the private sector to be suspended, backing the Stop The Off-Payroll Tax campaign’s aim to stop the measure being introduced in the Finance Bill this year.
Jo Johnson correctly linked the deeply flawed IR35 legislation to the loan charge scandal and said something had “gone very wrong” with the loan charge and the roll-out of IR35 to the private sector and asked for a pause to both, so concerns could be addressed.
Paul Sweeney highlighted the failure of the shambolic CEST (Check Employment Status for Tax) tool and the recent FOI responses that exposed the fact that nearly all public sector contractors have been wrongly designated as ‘deemed employees’ despite having none of the benefits of employment, no sick pay, maternity/paternity pay and no employer pension contributions. The FOI was submitted by Director of the Stop The Off-Payroll Tax campaign Dave Chaplin and exposed the fact that nearly all contractors (a staggering 94%) at five key public sector organisations – the BBC, Network Rail, HS2, Met Office, and Crown Commercial Services – were ‘deemed employees’. CEST has also been found to have given the wrong answer in recent tax tribunals.
Dave Chaplin has now written to Chancellor Phillip Hammond and Chief Executive and Permanent Secretary of HM Revenue and Customs, Jon Thompson, exposing the wholesale failure of CEST and challenging them to prove it works or withdraw it. A copy of the letter is here.
An Early Day Motion, EDM 2379, has also recently been tabled by Ged Killen, Labour MP for Rutherglen and Hamilton West. The EDM, only tabled last week, already has 13 MPs from four parties supporting it and now contractors up and down the country are emailing their MPs asking them to sign it and back the UK’s flexible workforce.
The Stop the Off-Payroll Tax campaign, led by ContractorCalculator, supported by contractors and small businesses and other organisations, is campaigning to stop the introduction of the damaging off-payroll rules to the private sector and for the Government to instead launch a much-needed review into the deeply flawed IR35 legislation and to come up with the right way to recognise contracting in the tax system. The roll-out of the Off-Payroll Tax will cause huge damage to the UK labour market, some of which has already been realised. The double stealth tax – on businesses and contractors will slap a huge 14.3% stealth tax on UK businesses.
As things stand, the legislation for the Off-Payroll Tax will be introduced the Finance Bill this Autumn, 2019 to go live in April 2020 so MPs are being asked to sign the EDM and to show their support to Stop the Off-Payroll Tax campaign!
Dave Chaplin, Director of the Stop the Off-Payroll Tax campaign and CEO of ContractorCalculator said:
“The Stop the Off-Payroll Tax campaign is delighted that two MPs raised the damaging Off-Payroll Tax in Treasury questions. We thank Paul Sweeney and Jo Johnson for exposing the serious flaws in the Treasury’s plans and for showing support for the UK’s flexible workforce and all businesses who rely on contractors and freelancers. We hope many more MPs from across the political spectrum will join them in calling for the Treasury to abandon their plans to roll-out The Off-Payroll Tax to the private sector, considering the damage it has done in the public sector.”
“Paul Sweeney is right to highlight the demonstrable failure of HMRC’s CEST Tool, which the latest evidence shows is leading to blanket assessments of contractors in the public sector. This follows the fact that HMRC have been humiliated in tax tribunals where CEST has been shown the give the wrong answer in the majority of cases. Jo Johnson was also spot on when he said that “something has gone very wrong” with the roll-out plans of The Off-Payroll Tax and the loan charge, all of which are linked to the deeply flawed IR35 legislation.”
“The Off-Payroll Tax will slap a huge 14.3% stealth tax on UK businesses and will not lead to additional revenue for HMRC. So MPs need to halt to these damaging plans and proper consideration of how best to recognise contracting and freelancing in the tax system, to the benefit of all and the UK economy.”