Tax summit deems changes to contractors’ expenses ‘unworkable’
The right for contractors to claim travel and subsistence relief has been a hot topic amongst those who could be affected by a change in the rules, with many commentators concerned that it could spearhead a significant change in the way the flexible workforce operates. This, in turn, could have a wider impact on the UK economy, with businesses unable to meet demand if they cannot recruit short term staff to fulfil specialist roles that would traditionally go to contractors.
To add to the debate, the recent Self Employment Tax Summit brought together a number of contracting experts to discuss issues such as this. These included representatives from the Freelancer and Contractor Service Association, the Office of Tax Simplification and the Association of Independent Professionals and the Self Employed, all of whom came together to discuss the proposed changes to the legislation.
The delegates at the event believed that the proposals put forward by HM Revenue and Customs will put contractors at a significant disadvantage compared to their permanently employed counterparts. Despite the government’s insistence that the removal of travel and subsistence expenses would ‘level the playing field’ between contractors and employed individuals, the fact that contractors bear a significantly higher level of risk means that this is not a way to achieve that goal.
The fact that contractors often have to travel substantial distances for work means that many would be making a significant loss if they were unable to recoup these costs. Julia Kermode, the CEO of the FCSA believes that HMRC have overlooked this important factor when it comes to their thought processes and that the abuse that they are trying to combat is not widespread amongst genuine contractors, nor proportionately handled with their current proposals.
Issues such as those surrounding supervision, direction and control were also discussed, with delegates arguing that the very nature of contracting comes under threat when dealt with in this manner. Not only are nearly all projects subject to some level of SDC, but the nature of SDC can change over the course of a project, especially given the lack of clarity surrounding the definition.
The summit also expressed concerns that HMRC do not understand the value of the flexible workforce and that the removal of the tax relief could exacerbate the problems already caused by the skills shortage.
Contractors who want to know more about the current system can use our guide to contractor expenses to understand more about what they can and cannot claim under the current system. We also have guides which can help you to understand more about contractor tax in general and a range of free contractor guides which provide some insight into what life is like as a contractor.
For more specific advice and information about the services we offer and the packages that we have designed to help contractors save time and money, our friendly team are always on hand, so call us today on 01442 275789 or email email@example.com.