Stop the The Off-Payroll Tax campaign exposes latest disinformation from the Treasury
The Stop The Off-Payroll Tax campaign has exposed the latest misinformation from the Treasury, publishing a comprehensive rebuttal of a letter the Treasury Minister has sent to MPs, attempting to justify the controversial policy planned for introduction in this years budget.
The letter from Jesse Norman has been sent to MPs to try to persuade them that the ‘off-payroll rules’ will have no effect on business, yet it makes a series of misleading and in some cases, false claims whilst presenting HMRC “estimates” as evidence, where no such evidence exists. The Stop The Off-Payroll Tax rebuttal is here.
Jesse Norman’s letter suggests “many of these individuals cannot, or do not, correctly operate the rules, leading to widespread non-compliance” yet provides no evidence that this is the case. In actual fact, HMRC have only ever fully won 1 out of 14 of the last court cases on this matter.
The rebuttal also raises concern over the continued misleading claims and scapegoating of individuals as tax avoiders, which is untrue. The reality is that the vast amount (84%) of the tax being sought is due to firms not paying employment taxes (Employers NICs or App Levy). The new Off-Payroll tax is actually a new tax burden for firms that hire self-employed individuals and effectively a new 14.3% stealth tax on growing businesses that hire contingent workers. The confusion is already causing firms to shed contractors, resulting in both UK job losses and ironically a decrease in tax revenues.
Mr Norman’s letter claims there has been no damage from the 2017 implementation, but real evidence clearly shows the damage to the public sector and public sector workers. A study by IPSE and CIPD, found more than half (51 per cent) of public sector hiring managers thought they had lost skilled contractors because of April 2017’s changes to the rules, while nearly three-quarters (71 per cent) were facing challenges in retaining their contractors. Organisations representing locum doctors and nurses have confirmed that their members are leaving the NHS and some are emigrating, due to the Off-Payroll Tax.
On CEST, the rebuttal also questions Mr Norman claims of accuracy, and highlights how it has been shown to be inaccurate and biased, giving contradicting results to judges decisions in tax tribunals. The tool, supposedly introduced to support businesses, is inconsistent with the case law. Bizarrely, HMRC also admitted to the Public Accounts Committee that it threw away its last set of test data and didn’t even keep a list of names of the people who tested it. That’s an appalling approach to software engineering, that would not even pass muster for a GCSE project.
HMRC and the Treasury recently ignored the findings of HMRC’s own consultation making a mockery of the exercise.
Already 34 MPs have signed a Parliamentary motion calling on the Government to drop the plans and now the legislation is published, many more MPs are waking up to the damage that will be done by the Off-Payroll Tax.
Recently eleven leading organisations in the contracting and freelancing sector wrote an open letter to the Prime Minister and Chancellor, asking them to stop the Government’s ‘War on Contracting’ and drop the Off-Payroll Tax and the Loan Charge and instead work with the sector.
Commenting, Dave Chaplin, Director of the Stop The Off-Payroll Tax campaign said:
The latest letter from Treasury Minister Jesse Norman to MPs is yet another example of disinformation, both misrepresenting the Off-Payroll Tax as a policy and also worryingly denying the evidence of the reality of its damaging impact. The letter is yet another attempt to mislead MPs and Parliament. Why would a Government Minister put their name to this?
The reality is that the Treasury and HMRC simply cannot be trusted to give an accurate and honest picture of their controversial and flawed plans. As with the appalling campaign of misinformation exposed by MPs over the Loan Charge, HMRC and the Treasury are willfully misleading Parliament over the Off-Payroll Tax.
This war on contracting and the misinformation campaigns must stop. We urge all good MPs and Parliamentary Committees to both see through the attempts to mislead and call for proper scrutiny of Ministers and of HMRC, who are forcing through ill-considered policies which will damage small businesses and the self-employed.”