Boris Johnson to Abolish Contracting
The Queen’s Speech intends Boris Johnson to abolish contracting in the next year. According to the Queen’s Speech “We will increase fairness and and flexibility in the labour market by stopping employers and workers experiencing significantly different outcomes from flexible forms of working.”
That is quite chilling. We know who and what Boris Johnson and his Chancellor Sajid Javid are talking about here. Some commentators take this to mean that they will continue with their plans to implement the IR35 changes in the private sector in April 2020. But I fear it is worse than that – much worse.
The Queen’s Speech is about introducing new policies – not restating old ones. So they must mean that they are working on some new plan to make conditions ‘fairer’ in the flexible workforce. The IR35 changes next April are in the bag already.
Questions on Boris Johnson to Abolish Contracting
- What is the anomaly between self self employed and permanent employees tax?
- What was Sajid Javid’s view on IR35 tax previously?
- What are the Signals that the Government intend to go further on IR35?
- What Percentage of Contractors do the Government believe are IR35 non-compliant?
- What is in the Matthew Taylor Report the Government Intends to Implement?
What is the Anomaly Between Self Employed and Permanent Employees Tax
We all know what the Government means by ‘fairer’. Both Theresa May and Philip Hammond said that “It is an unfair anomaly that a self employed person earning £100,000 a year pays less tax than an employee earning £100,000 a year.”
We all know that is not comparing like with like but Theresa May said that she intended to fix that ‘unfair anomaly’.
It was hoped that with May and Hammond gone that the new PM / Chancellor might at least stop the looming IR35 changes or even abolish IR35 altogether.
What Was Sajid Javid’s View on IR35 Previously
After all, Chancellor Sajid Javid said, a few years ago, when Managing Director of Deutsche Bank, and an avid user of contractors, that “the Government should repeal the silly IR35 tax”.
He’s obviously changed his mind, Either that or he, and Boris Johnson, sees contractors as soft touches
What Are the Signals the Government Intend to Go Further on IR35
So, what are the other clues that the Government intend to go even further than just implementing the April 2020 changes in the private sector?
Recently Treasury Minister, Jesse Norman, when answering a question on IR35 said that there was “only 10% compliance in this area.”
A few weeks later HMRC said exactly the same thing.
So, we know the Governments thinking on this. They reckon that 10 times as many flexible workers should be paying PAYE as do now.
However, 54% of all contractors pass the Check Employment Status for Tax test set up by HMRC.
What Percentage of Contractors Do the Government Believe to be Non-Compliant on IR35
So, the Government must mean something else. It looks as if they consider that 90% of the contracting profession are non-compliant in this area in relation to paying the IR35 tax.
So, it looks s though the Government is intending to go even further in terms of making many more contractors PAYE.
It’s possible that they have made this clear to the major banks and that may be why so many have announced blanket bans on Personal Service Company contractors in the last few weeks.
What is In the Matthew Taylor Report the Government Intends to Implement
The Queens Speech says that “The Government is committed to going even further”. They intend implementing the Taylor Review which was published a while back. The Taylor Review said that there should be two types of contractors, Dependent Contractors and Independent Contractors.
Those who would be just extra bodies on IT projects would all be Dependent Contractors and be taxed accordingly. Independent Contractors would be those classified at the moment as Consultants.
A Dependent Contractor works predominantly for one company at a time says Taylor. To find out what Taylor recommended for contractors, you should look at Higher Contractor Tax Recommended by Taylor Report for the Government
The Autumn Budget will be announced on November 6th. We will hear then what the Government’s plans are for “going even further” and how they will stop ” workers experiencing significantly different outcomes from flexible forms of working.”
We will hear the plans for Boris Johnson to Abolish Contracting then.
I fear the worst.
Some contractors have said up a group to share knowledge of what is happening.
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