New Treasury proposals “threaten those who are the lifeblood of modern business”

The Treasury has come under fire over its latest proposals for taxing self employed workers which would remove current exemptions for people who work as interim and freelance employees.

Andrew Bird, CEO of GSMarketplace, called the plans “a threat to the lifeblood of modern business” and said HMRC should be “spending more time reviewing the basis premise of taxation rather than plotting further attacks on workers.”

The Treasury has said it believes a third of people claiming self-employed status as a “personal service company” are actually full employees and should pay more tax. They have claimed that without reforms the current rules could ‘cost’ HMRC £1.2bn a year by 2023.

But these figures were dismissed by Bird, who said freelancers “generate financial revenue not only for themselves but for the rest of the economy.”

“Why is our government attacking people who shed blood, sweat and tears working in a business model which is hard work and high risk instead of looking at ways to stop the huge waste which goes on in the public sector,” he asked.

“We should be encouraging freelancers who are prepared to take the risks associated with operating as an independent entity. These people do not have the safety net of a regular salary, paid holidays and a pension plan. The world is set up for a credit economy, with businesses and mortgage lenders wanting people to prove their monthly income via a contract so anyone who makes a living as a professional interim gets my utmost respect and admiration. It is a tough market but it is the flexibility of these people which allows the companies who employ them to launch new products and ideas without the burden of taking on full time staff.”

The Treasury is looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring “off-payroll” contractors stick to the tax rules known as IR35, with the announcement pencilled in for the coming budget.

Chancellor Philip Hammond is under pressure to find an extra £20bn for the NHS, announced by Theresa May over the summer, which was initially not supposed to be funded by tax rises.

“Without the risks interim workers take with their career choices, the economy would suffer: The last thing these people deserve is for HMRC to stick another target on their back,” said Mr Bird.

“IR35 was poorly conceived from the outset. This regulation may catch the few that cheat the system but in doing so it will penalise the vast majority who are the very lifeblood of modern business. We should champion them and salute and support them – much as was promised on the political stage only 2 weeks ago.

“HMRC needs to move with the times and accept the inevitable. The geriatric systems and processes used are no longer suitable for the modern ways in which many are forced to make their way in the world. Reform of the IR35 rules might be less politically controversial but it is economically stupid and this apparent refusal by government departments to strip out waste and lower their spending is being permitted at the expense of wealth generators who do not have big unions or big lobbyists to speak up for them.”