Are the 5 million self-employed workers seen as an important part of the electorate?

Following on from Boris Johnson unveiling the Conservative manifesto on (24/11/19) and the Liberal Democrats announcing theirs (20/11/19), it appears the 5 million votes of the self-employed are being viewed as an important section of the electorate.

Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA) speaks very positively about the Conservative’s manifesto.

Ms Kermode said:

We welcome the Conservative’s commitment to support businesses and it is good to hear them pledge to help small businesses, family firms and the self-employed.  Their plan to better support the self-employed is also welcome providing improved access to finance and credit and making the tax system easier to navigate. Their Red Tape Challenge is also something FCSA welcomes to ensure that regulation is sensible and proportionate.  Small businesses have been hindered by red tape and administrative burdens for far too long.  We have seen enormous amounts of legislation impacting businesses in recent years and this needs to stop now to allow for a period of consolidation so that businesses can be free to concentrate on what they do best, which is essential given the current economic uncertainty.

We need a tax system that is easier to navigate for self-employed people given the inherent complexities of IR35 – giving the Office of Tax Simplification more resources, scope and power would be a step in the right direction.  The Conservative Manifesto is full of welcome commitments which are easy to make but quite another thing to deliver.  The proof will be in the pudding should they make it back into No 10.

The Conservatives also plan to increase the National Insurance Contribution (NIC) threshold to £9,500 next year which the Association of Accounting Technicians (AAT) sees as beneficial to “almost all” employees.

The Liberal Democrats manifesto announced that it would review IR35. Its manifesto reads: “End retrospective tax changes like the loan charge brought in by the Conservatives, so that individuals and firms are treated fairly, and review recent proposals to change the IR35 rules.”

However, Dave Chaplin, CEO of contracting authority ContractorCalculator is more pessimistic of the Tory manifesto.

Mr Chaplin said:

The politicians have been heavily lobbied by thousands of contractors as part of the Stop The Off-Payroll Tax campaign, together with representations made by relevant trade bodies for freelancers and businesses of all sizes. And the result? Zilch. All fallen on deaf ears.

We are witnessing considerable damage to the financial services sector as contractors are terminated and work moved off shore. The Off-Payroll Tax is turning out to be what everyone expected – damaging to the valuable UK flexible workforce.

It’s even more disturbing that the Conservatives are still purporting to be the party of Business and the self-employed on the one hand, yet hitting them with a massive new Tax with the other.

At the same time, Qdos, an insurance and tax advice for the self-employed firm are not impressed with the updated version of HMRC’s Check Employment Status for Tax (CEST) which was built to help companies decide the IR35 status of their contractors.

Seb Maley, CEO of Qdos said:

Despite being tweaked, CEST still isn’t fit for purpose. With IR35 reform only a few months away, recruitment agencies and end-clients shouldn’t rely on it to deliver accurate information regarding a contractor’s IR35 status.

From the wording of the questions to the tool’s reliance on the right of substitution when providing an answer, CEST poses a risk, not just to contractors, but to the agencies and end-clients that choose to use it.

Still, at this stage in the game, CEST doesn’t take into account Mutuality of Obligation (MoO) either. Given MoO has been the deciding factor in a number of recent IR35 Tribunals, that CEST still assumes it exists in every contractor engagement – when Tribunal results show otherwise – is another reason not to trust it.