Contractor tax ‘long overdue’ for review according to trade body
The government could be setting a course for failure if they do not get their tax affairs in order soon according to PRISM, a not-for-profit trade association that represents service providers and payment intermediaries. With 1.6 million contractors in the UK today, the need for a review of the tax legislation that affects them is now a matter of urgency if the government are to meet their own tax goals.
The three goals sounded simple enough: to reduce the tax gap, which is the difference between the amount of tax due and that collected, to simplify the tax regime and to level the playing field between employees and those who work for themselves. However, these objectives, which were set by HM Revenue and Customs, are unlikely to be achieved unless there is a full review conducted into contractor tax.
Crawford Temple, of PRISM, is concerned that the current tax system simply isn’t fit for purpose as it was designed to suit the needs of a previous generation as opposed to those of the current crop of independent professionals. The plans to change the way expenses are claimed have posed a further threat to those who work flexibly, and the fact that around ten per cent of the UK’s working population fit this category means that there is an urgent need to ensure that they are accommodated.
Mr Temple believes that the ongoing attempts to ‘brush [contractors] under the carpet’ is simply not feasible any more given the numbers involved. He considers the current system to be a sticking plaster on the problem of how to treat contractors for tax purposes. He has pointed out how difficult it is to balance the needs of employers and workers when the system isn’t really geared up to cater for either.
A deeper understanding of the labour market as a whole and proper clarification of the way tax should be handled for contractors should be a priority for any government that is keen to achieve consistency and continuity for all its workers.
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