Off-Payroll working: treating people fairly Contents
Chapter 6: Guiding principles
174.Drawing on the evidence gathered in our inquiry we have considered what principles should apply in testing whether any new proposal, whether for a statutory employment test or a “stop-gap” solution, will meet the policy objectives of improving compliance, protecting the tax base and promoting fairness in the amount of tax paid by people doing similar jobs.
175.We recommend that the Government design a short-term means of raising revenue that will not prove burdensome for businesses as they emerge from the COVID-19 pandemic, and a long-term alternative solution to the off-payroll working rules. In so doing, they should apply the following six principles.
176.Any alternative to the off-payroll working rules should be:
- Certain—the complexity of the off-payroll rules and the limitations of the CEST tool mean that it is difficult for clients and contractors to be certain about their position. All parties should have certainty about the tax treatment that will apply.
- Simple—the off-payroll rules are too complicated. Any solution should be as simple as possible.
- Fair—the proposed off-payroll rules are unfair because they treat contractors as employees for tax purposes only, essentially creating “zero-rights” employment. Treatment as an employee for tax purposes should only apply where there are employment rights and risk-sharing between employer and contractor.
- Supportive of growth—any solution should respect and preserve the flexibility that exists within the UK labour market.
- Administratively straightforward—the burden that the off-payroll rules imposes on clients is unreasonable. Any alternative needs to be straightforward to operate, and not excessively burdensome to administer.
- Enforceable—with limited resources, IR35 became impractical for HMRC to monitor and enforce. Any new proposal should be manageable for HMRC.