The Ministry for the Prevention of Wealth

The Ministry for the Prevention of Wealth

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By Doug Shanks

Like a minor public school in the fifties, the state continues its war of attrition against individuality. Eamonn Holmes is the latest IR35 scalp losing predictably enough at tier one, his defence that his is a unique offering equally predictably mocked in the tabloids. IR35 has become the generic for measures used by HMRC to argue that one is employed rather than selfemployed. IR35’s problem is there is no strategy. It’s usually possible to see the hand of the treasury behind bad tax legislation but one feels HMRC has driven IR35. It’s the Phil Neville dilemma: if that’s the answer what was the question?

Anecdotally the issue arose in the computer industry, particularly software development; one can be forgiven for
hip-shooting as there is scant research into the effects of IR35 still less preparation by HMRC for its relaunch. Larger companies want the flexibility; contractors enjoy the independence. A great solution that a paranoid controlling
state seeks to destroy. When the state starts playing divide and rule you’re in trouble. IR35 has been around for a while and unless you were an independent computer consultant it got off to a slow start in the nineties. Phase two saw HMRC target what were known as John Birts, personal service vehicles espoused by the great and good. Umbrella companies that recruited the subcontractors were never a good idea, poorly implemented by organisations that all but advertised themselves as avoiders of tax, with assets and operations safely offshore, leaving firms like ours to earn a crust picking up the pieces.

Phase three of a disastrous regime that has seriously damaged the self-employed community in a world-class state-initiated own goal, is effectively a complete relaunch. The onus is now on the employer to prove that the supplier is not effectively an employee in a disastrous over-extension of the Revenue’s powers. HMRC will be devils with a new furnace. You might ask why I’m Angry of Tooting? The self-employed community is dominated by fragile SME’s (small-medium enterprises) that doesn’t need extra taxation, administrative burdens and complex new arrangements with its clientele. Surely the government will recognise the unintended consequences of an ill-conceived tax.

The self-employed community represents roughly 15% of the working population, presumably significantly
less than that of voters. It doesn’t have a voice and future historians will see it as a persecuted minority. Then there is the Hammond ivory tower envy idiocy. Self employed people need to pay the same tax as everyone else; so give them the pensions, the perks, the paid holidays, the sick leave and the job security. Get a life. You don’t hear whinging from the entrepreneurs, mould breakers, disrupters and rebels. No one grows up dreaming of being Rowntree (the head of house in If…).

Remember what Mrs Thatcher taught us. A liberal tax regime collects more tax. IR35 is a dreadful solution to what was never that much of a problem. The Revenue can crow about Eamonn Holmes for now; history tells us they’ll lose on appeal.

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