Finance Bill

Written evidence submitted by Martin Barber (FB05)

My name is Martin Barber . I am the director and sole owner of a private limited company. I am providing evidence to this committee due to my severe concerns over the off-payroll tax changes due to be implemented from the start of the next tax year.

Submitted in a personal capacity.

Dear Parliamentarians of the Public Bill Committee ,

1. I am writing to you to provide my views on the extension of off-payroll working rules. Please be aware that where I mention HMRC, I am referring to either HMRC or HMT. I am not sure of the finesse regarding their exact roles.

2. Let me preface the main content of my email by making you acutely aware of the extreme anxiety that the impending rule changes are having on my fellow professionals and friends that this will impact upon . On a personal level, I have been struggling with sleep, my mind negatively obsessed by the consequences of these damaging rules, both to myself and the wider British economy at a time of great national upheaval. This uncertainty has been haunting us since the changes were first announced in the public sector. The country is constantly reminded about its low productivity, I certainly do not see this action improving the situation.

3. Before going into the detail of why the latest changes to IR35 are so damaging, a wider perspective on the original legislation should be gleaned. The original rules are vague and confusing to the point that nobody but qualified solicitors and judges can unpick them, and even then, they make mistakes. So firstly, it should be ask ed if the rules were ever fit for purpose ? If rules are expected to be implemented and followed by the masses, then they need to be understood by the masses. Clearly HMRC are unable to understand their very own rules, as they have lost the vast majority of investigations that have gone to trial since 2010. Including one that went to the Upper Tribunal.

4. This is just not good enough. First HMRC accuse wrongly, second, they waste further taxpayers’ money chasing frivolous claims.

5. The continued changes to these rules, are a poor attempt at fixing something fundamentally broken.

6. This is the twenty-first century and it sees the working world changing at an ever rapid pace, the old norms of working for a single company for the entirety of your career are largely dead. A flexible and dynamic economy is what is demanded by society. IR35 flies in the face of this. Now with the challenge of COVID-19 arriving, the affects of these revised rules will be even more damaging.

7. What will be the effect of these changes? I will explain what I see happening:

7.1. Large businesses will not engage in a laborious process of assessing contractors whilst also accepting the potential tax liability for making an error. It is very simple, companies are risk averse. Plus the assessment process also comes at a cost. Also, the external "expertise" in these matters just does not exist in large enough volumes to support the large swathes of companies that need contractors.

7.2. Creation of No Rights Employees. Lowering employment rights to the point that, who will be offering jobs with the benefits of holiday, sick pay, pensions, etc. in the future? This is a race to the bottom. A stealth way of reducing workers' rights in this country. Is this how Great Britain outside of Europe, plans to compete in the future? If so, we may as well drop the "Great" immediately.

7.3. Project work shifting offshore. This is not a matter for debate, this is happening and it is clear to see, the internet is awash of evidence.

8. You only need to consider project work to realise the damage this will do. It literally is not feasible for companies to have full contingents of full-time staff in a world economy. They need flexible workers. Flexibility in the work force should be promoted, not punished. This is the work force that allows the country to adapt and rise to the challenges of tomorrow. Punishing that segment of society will only cause economic pain.

9. On to HMRC's "solutions":

9.1. CEST - woefully inadequate tool that has not been tested, that was not built using real world examples and case law. It has a glaring omission; Mutuality of Obligation (MOO), which HMRC assumes in every case. HMRC have even tried to have evidence from CEST rejected in a court case. You could not make this farce up.

9.2. Status Determination Statements (SDS), which are to be issued by each client for the contractors they engaged with and HMRC have left it up to the clients to design their own dispute resolution processes. How are the disputes ever going to be resolved to the satisfaction of the contracting party? The client will make its decision based on its reluctance to take on risk. That alone is the only thing they will consider. There is even mounting evidence, that even after external providers of IR35 compliance have carried out reviews and assessed a contractor as outside, that the client refuses to accept the result.

10. When HMRC are challenged on the effect of these rules to the Public sector, they state that it has resulted in increased payroll tax. However, they have failed to examine (conveniently or otherwise) corporation tax, dividend and VAT (in the case of financial services) tax losses in the same period.

11. HMRC are simply targeting the easiest link in the chain. They want more tax revenue and have decided that the self-employed are an easy target.

12. It is becoming more apparent that there is no over-sight of HMRC, they are a law unto themselves. The Public’s confidence in a fair and equitable tax system is eroding at a rapid pace.

13. The House of Lord’s Finance Bill Sub-committee recently published a lengthy report into this subject, urging an independent review of this impact of the legislation among other recommendations. The government needs to pay attention to this valuable report.

14. Parliamentarians , I implore you to help and support the flexible workforce, to educate your peers, to challenge the government, to halt the roll-out of these new rules, to push for a completely independent review of IR35 that encompasses the full economic effects of these draconian and frankly downright unfair rules.

I appreciate your time to read my submission . Thank you.


Yours faithfully,


Martin Barber

29 th May 2020

 

Prepared 15th June 2020