New Treasury Minister must listen to Off-Payroll Tax consultation unlike his predecessor
The Stop The Off-Payroll Tax campaign has called on new Treasury Minister, Jesse Norman MP, to actually listen to the consultation on the Government’s controversial plans to extend the Off-Payroll Tax to the private sector, unlike his predecessor, Mel Stride MP.
The Treasury consultation into the measures finished yesterday, 28th May, with many organisations and individuals objecting to the plans and pointing out their flaws. During his tenure as a Treasury Minister, Mel Stride was infamous for ignoring consultations and evidence and pushing forward damaging and unfair policies anyway, leading to the Treasury being dubbed “tin-eared” by the Conservative Chair of the House of Lords Economic Affairs Committee, Lord Forsyth of Drumlean. As things stand, the legislation for the Off-Payroll Tax will be introduced in the Finance Bill this Autumn, 2019 to go live in April 2020.
The Stop the Off-Payroll Tax campaign last week welcomed new Treasury Minister, Jesse Norman MP, to his role and has called on him to change course and work with, rather than against, the contracting sector by announcing that he will suspend plans to introduce the controversial off-payroll tax to the private sector.
Having imposed the Off-Payroll Tax – the ‘off-payroll working rules’ – upon the public sector, HMRC is intent on enforcing a private sector rollout despite clear evidence of the damaging impact it has had on the public sector, including the NHS. Poor guidance has resulted in thousands of public sector workers being incorrectly or blanket assessed as ‘employed for tax purposes’ which has seen many highly skilled workers abandon the public sector.
The roll-out of the Off-Payroll Tax will cause huge damage to the UK labour market, some of which has already been realised. Already large companies are telling contractors they will no longer take them on next year, when the Off-Payroll Tax comes in. The double stealth tax – on businesses and contractors will slap a huge 14.3% stealth tax on UK businesses. The ‘fee-payer’ (client or agency) must pay employment taxes on top of the payment made to the contractor. This means additional tax of employer’s National Insurance (NI) (13.8%) and the Apprenticeship Levy (0.5%). This cannot be legally deducted from the current contractually agreed fee with the contractor. Therefore, as things stand, it is a new amount of tax that needs to be paid by the fee-payer.
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. An Early Day Motion, EDM 2379, has been tabled and has support already from 19 MPs from five parties supporting it https://edm.parliament.uk/early-day-motion/52909/ir35-offpayroll-tax-extension-to-private-sector.
Dave Chaplin, Director of the Stop the Off-Payroll Tax campaign and CEO of ContractorCalculator said:
The Treasury consultation has now concluded and we are aware of many businesses and contractors who have strongly objected to the flawed plan to extend The Off-Payroll Tax to the private sector. So the big question is, will the new Minister, Jesse Norman, actually listen or will he continue to be part of the ‘tin-eared’ Treasury that wilfully ignore evidence to support HMRC’s ideological attack on the UK’s flexible workforce.
There is no point consulting then ignoring the findings of the consultation and alas the Treasury have form for this, so we call on Jesse Norman to actually listen, ditch those tin-ears and work with the contracting sector instead of against it. That means dropping the flawed plans to roll-out the damaging Off-Payroll Tax and instead looking at how to recognise contracting in the UK tax system.