The Chartered Institute of Taxation (CIOT) has become the latest industry body to raise concerns about the government’s proposed legislation to tackle false self-employment.
Endorsing the aim of stamping out false self-employment, the CIOT nonetheless believes that the new rules governing the use of onshore employment agencies, which include Umbrella Companies and recruitment firms, are too loosely worded to tackle genuine abuse and can easily hit genuinely self-employed professionals in the UK’s contracting community.
To fall outside the new rules, individuals must demonstrably not be “subject to, or the right of, supervision, direction or control as to the manner in which the duties are carried out by any person”. This requires proving a negative, which the CIOT considers virtually impossible.
Citing the example of a genuinely self-employed electrician who has been engaged on a temporary contracting basis by a panel of approved selectors to undertake work on a building site for a few days, completing tasks such as wiring specified areas and adding power sockets, the chairman of CIOT’s sub-committee for employment taxes, Colin Ben-Nathan, said: “However, when she is on site she is subject to the oversight of the site foreman who has overall responsibility for health and safety. It would clearly not be the right result for ‘supervision’ to extend to her situation – but does it? We think that more clarity is needed in order to ensure that the legislation distinguishes between the genuinely self-employed tradesman and those in false self-employment.”
The government may need to note that the chorus of criticism concerning its proposals appears to be growing stronger with every passing day.