|
Taylor may deliver fairness in terms of
rights, but more work is needed for Tax fairness and simplicity
WHILST welcoming the Taylor Review's
proposals to bring greater fairness in rights to certain workers in the
'Gig Economy,' the Chartered Institute of Taxation (CIOT) advises that the
suggestion in the Taylor Review to keep the three categories of workers under
employment law; renaming 1 'dependent contractor' from
'workers' means
further work will still be needed to ensure fairness and simplicty in Tax
outcomes.
The Institute is supportive of the Review's recommendation that treating
different forms of employment more equally in the Tax system would be fairer,
and would better reflect the reality of the modern UK labour market.
Colin Ben Nathan, Chair of the CIOT's Employment Taxes Sub-committee, said:-
"Whatever it brings in fairness for the worker, unless the Tax status of 'dependent
contractors' is addressed at the same time as their employment and other
rights are established, the Tax system will remain complex and distorted.
Maintaining three different categories of workers (employed, 'dependent
contractor' and self employed) for employment law, but just 2 for Tax (employed
and self employed) is a mismatch which means confusion and inconsistency among
Taxpayers and their employers will continue. It is crucial that individual
Taxpayers and employers know what their responsibilities are to HMRC before any
such detailed change to the three employment categories goes ahead. We welcome
the desire of Taylor to take account of the Tax system on his changes to
employment definitions and agree that treating different forms of employment
more equally in the Tax system would be fairer, more economically efficient and
support better quality work. It is vital that any future changes to employment
Taxation to align with the three new bands of workers are thoroughly consulted
on."
Colin Ben Nathan added:- "The imbalance between the Tax burden on
employment and self employment remains very large and may be the biggest issue
to be addressed if the Tax system is to keep pace with working practice. The gap
should be narrowed so as to remove incentives for one status over another from a
Tax viewpoint. The Government must develop an overarching roadmap for the
Taxation of labour in the 21st century. This must address what the key Tax
challenges are and how they are to be managed over the next 5 to 10 years. Not
lEast given increasing automation and off shoring, less people paying Tax and
National Insurance and so on the face of it less revenue flowing to the
Treasury."
While the CIOT has called for the Chancellor to look again at greater alignment
between the employed and self-employed, it said in its submission to Taylor that
the key distortion is Employer's NICs, which applies to employees but not the
self employed. Government could consider broadening the scope of employer NICs
to make it a wider levy on business costs, the Institute suggested.
|
