Prime Minister and Chancellor asked to change course and end the ‘war on contracting’ by stopping the Loan Charge and the Off-Payroll Tax

14 Aug 2019

Eleven leading organisations representing the UK’s thousands of contractors and freelancers have written an open letter to the new Prime Minister and Chancellor of the Exchequer, Boris Johnson and Sajid Javid. They are calling on them to change course and end the previous Government’s ‘war on contracting’ by stopping the Loan Charge and the Off-Payroll Tax, and requesting that they work collaboratively with the sector.

Eleven leading organisations representing the UK’s thousands of contractors and freelancers have written an open letter to the new Prime Minister and Chancellor of the Exchequer, Boris Johnson and Sajid Javid. They are calling on them to change course and end the previous Government’s ‘war on contracting’ by stopping the Loan Charge and the Off-Payroll Tax, and requesting that they work collaboratively with the sector.

The letter congratulates both Boris Johnson and Sajid Javid and asks them in their new roles as as Prime Minister and Chancellor to change course as a Government and to stop the ‘war on contracting’ begun by their predecessors.

The letter asks for the new Prime Minister and Chancellor to take action on two key policies that are causing huge concern for contractors and freelancers: the Off-Payroll Tax roll-out and the Loan Charge. The two key demands are that they:

  1. Suspend the Loan Charge before 30th September 2019 and order the independent review that the Prime Minister agreed was necessary during his leadership bid and has supported in a letter to the previous Chancellor;
  2. Announce that the Government will remove the roll-out of the Off-Payroll Tax from the draft Finance Bill and request that the Treasury work with the contracting and freelancing sector to reassess this sector’s contribution to the UK economy and the tax system, to the benefit of all.

The letter reminds both men of commitments they made previously. In 2009, Sajid Javid said, in an article in Conservative Home, that the Conservatives would “repeal the silly IR35 tax on providers of personal services”. Boris Johnson stated at the Conservative Leadership Party hustings in Carlisle in June that the Loan Charge “seemed superficially unjust” and that “there should be an independent review”. Significantly, it has also emerged that Boris Johnson was one of more than 50 MPs who signed a letter to the previous Chancellor of the Exchequer, calling for the Loan Charge to be suspended and reviewed.

The open letter asks both men to stand by their commitments and to restore the trust of contractors and freelancers by doing so. The letter also makes clear that both Boris Johnson and Sajid Javid are aware of the suicides of people facing the Loan Charge and the risk to others.

The joint letter also urges the Prime Minister and Chancellor to commence a proper investigation into HMRC, who have been described as ‘out-of-control’ by the influential House of Lords Economic Affairs Committee, chaired by Conservative peer Lord Forsyth of Drumlean.

The letter concludes by asking for the Treasury to engage with the contracting and freelancing sector and states that the sector “looks forward to meeting with the Treasury” once the two key policies mentioned, the Loan Charge and the Off-Payroll Tax, have been halted.

Commenting, Dave Chaplin, Director of the Stop The Off-Payroll Tax campaign and CEO of ContractorCalculator said:

The change of Prime Minister and Chancellor must now lead to a change of course over contracting, if the Conservative Government wants to win back the trust of the sector. This means announcing a halt to the damaging Off-Payroll Tax and the unfair Loan Charge.

The Treasury up to now listened to no-one other than HMRC, who have continually made a misleading case for these ill-considered policies which may suit their aim of ‘maximising revenue’ but have and will do huge damage to contracting and British business. We hope now that under new leadership, with Boris Johnson as First Lord of the Treasury and Sajid Javid as Chancellor of the Exchequer, we’ll see a new approach, an end to the war of contracting and a commitment to work with the sector to properly recognise and celebrate the UK’s flexible workforce.

Julia Kermode, Chief Executive of the Freelancer & Contractor Services Association (FCSA):

I hope that as the new Prime Minister and Chancellor, Boris Johnson and Sajid Javid will seize the opportunity to once again make the Conservative party genuinely a party for supporting UK businesses, and therefore safeguard our economy.

Now is not the time to damage the flexible labour market. With Brexit coming, potentially without a deal, then it is critical that the UK remains an attractive place to do business, and you can achieve this by making the simple decision to halt the Off-Payroll Tax reforms.

Steve Packham, Spokesperson for the Loan Charge Action Group said:

With a change of the leadership of the Government, we must now see a change of heart and urgent action to demonstrate this. Philip Hammond’s war on contracting has not only damaged business, but it has ruined lives.

The Loan Charge Action Group is delighted to work with leading organisations representing contractors and freelancers speaking with one voice and sending a strong message to Boris Johnson and Sajid Javid. The whole sector is clear that this Government must change course and stop attacking us, starting with dropping the draconian Loan Charge and the crippling Off-Payroll Tax.

Anthony Sherick, Director of ContractorUK said:

I hope the new Conservative leadership understands the requirement for a flexible and skilled workforce to help fuel the opportunities for economic growth. The new optimistic Prime Minister wants to focus on positivity and growing the UK economy and the benefits which the flexible workforce offers the UK is fundamental to this.

Contracting allows workers to gain skills across many environments and transfer these skills within the private and public sector. This should not be undermined at all – yet unbelievably measures introduced by the previous Chancellor will do just that, particularly the IR35 reforms.

James Leckie, MD of ITContracting.com / ‘IT Contracting’ said:

IR35 is a deeply unpopular and flawed piece of legislation. By turbo-charging it with the new ‘off-payroll tax’, this Government is further undermining the ability of professional contractors to carry out their work. Contractors are resilient by nature, but this is a step too far for many, and the Conservatives will surely be punished in a future election if they don’t rethink their plans as a matter of urgency.

Crawford Temple, CEO, Prism Association and Professional Passport said:

Perhaps now we can enter a new era where more progressive forward thinking can be applied to solving some of the challenges faced by Modern Employment rather than continuing with a sticking plaster approach. Using old legislation that has failed for many years to underpin change is not a lasting solution.

Ian Cass Managing director, the Forum of Private Business said:

With a new Prime Minister, Chancellor and Business Secretary, it’s time for this new government to put some action behind their words of support for business, so reversing the previous negative approach to the contracting and freelancing sector would be a good start. This is a growing business sector that needs support not barriers being put in their way.

Rhys Thomas from WTT Contracting said:

WTT has maintained from the outset that the loan charge is erroneous in law and mercilessly unfair to the contracting community and their families caught up HMRC’s relentless, blinkered pursuit of freelancers under IR35.

We strongly believe that the loan charge should be suspended immediately. Not only do we join this call for the new Prime Minister, Boris Johnson and Sajid Javid, the new Chancellor, to stand by their words and review the loan charge, but to listen to us and work with us to find a fair and equitable alternative.

Notes to editors

The eleven organisations who have signed the letter are:

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