Finance Bill

Written evidence submitted by PRISM (FB 23)

1. Clause 14 - Travel expenses of workers providing services through intermediaries

1.1 PRISM response

1.2 ‘ Where this section applies, each engagement is for the purposes of sections 338 and 339 to be regarded as a separate employment.’ This assessment is based on who benefits from the personal service and this added layer of complexity makes an already complex test almost impossible to assess with any level of certainty.

 

1.3   We believe that the test of the ‘right of supervision, direction or control’ is almost impossible to assess at arm's length with any certainty. Making this the responsibility of the provider, the party furthest down the supply chain, means that many workers will be wrongly denied relief due to risk-averse assessments.

 

1.4   Applying debt recovery to only the providers, unless fraud can be proven, is already resulting in recruitment companies and contractors seeking out arrangements that provide the highest returns rather than encouraging an attitude of compliance.

 

1.5   Furthermore, it is making the assessment of SDC for providers extremely difficult as no other party wants to provide information in case it is seen as fraudulent. Providers rarely have the access to end users that is needed to confirm the workers' arrangements.

 

1.6   Directors of providers hold personal liability where they rely solely on worker statements. The framework, as just highlighted, dissuades others from commenting and so in many cases the worker assessment is all a provider has to work from. This is resulting in responsibly run providers adopting a risk-averse approach and denying expenses that in some cases may have been allowed.

 

1.7 Rather than creating a level playing field, this is actually creating a more distorted marketplace that is benefiting those disregarding the rules. 

 

1.8 PRISM believes that a long term solution for modern working arrangements needs to be found. Only once modern engagement models are fully understood will the perpetual cycle of sticking plasters end.

 

1.9   PRISM calls for a wide ranging strategic review to understand these modern engagement models, the reasons why end clients use them and why many workers choose them.

 

1.10   HMRC compliance officers must be tasked with immediate enforcement of the rules to minimise non-compliant market distortions.

 

1.11   The UK’s flexible workforce is seen as one of the big positives for businesses investing in the UK. In a post-EU world this flexible approach will become even more important to UK plc. 

 

 

2. Clauses 87 - 110 – Apprenticeship Levy

 

2.1   PRISM believes that the Government should introduce an exception for employment intermediaries, including agency workers engaged on agency payrolls, as these arrangements are clearly outside the intended scope of the rules.

 

3. Clauses 172 - 177 - Office of Tax Simplification

 

3.1   PRISM welcomes the move to put the OTS on a statutory footing. We would make the following points and observations:

 

3.2   Whilst stemming the flow of complex tax legislation is vital, it is essential that a rounded understanding across many areas, not just tax, is achieved to find policies that will stand the test of time. PRISM would like to see the OTS take account of the work of government departments other than the Treasury and DWP, and consult effectively with stakeholders including workers, agencies, intermediaries and employers to create this rounded view.

 

3.3   PRISM believes an important first step on this path would be for the OTS itself to carry out the Strategic Review of engagement models used by employers. This would help produce a set of strong recommendations for adjustments to the tax system that reflect common working practices.

 

3.4   PRISM believes that the OTS needs this wider perspective to make rounded recommendations that will align the tax system to the modern economy.

4. About PRISM

4.1 PRISM is a not-for-profit trade association whose members provide services to temporary workers and contractors.

4.2 Our members include payroll service providers, umbrella companies and accountancy firms that help workers operate through their own limited companies (PSCs).

4.3 One of PRISM’s main objectives is to create a stable, orderly market that promotes high standards and compliance with tax policy and legislation. In achieving this it will provide our members with a high degree of certainty and confidence allowing them to develop long-term strategic plans and invest in the growth and development of their business

July 2016

 

Prepared 8th July 2016