The Association of Independent Professionals and the Self Employed (IPSE) has called on the Government to rediscover its former support for freelancing and contracting professionals by scrapping proposed IR35 reforms in the private sector.
IPSE’s Policy Development Manager, Jordan Marshall, cautions Chancellor Phillip Hammond
that his planned private sector IR35 changes will very likely result in thousands of hardworking contractors paying much more tax than they legally should, and that it will place an immense administrative burden on all businesses that engage them.
Yet, the current emptiness of the Government’s claims to being small business-friendly doesn’t end with IR35, Marshall explains. He cites as evidence the attempt by the Chancellor to raise the rate of National Insurance paid by sole traders last year, which was only withdrawn after pressure from IPSE, other business groups and backbench Conservative MPs forcing the Government to back down.
In its present incarnation, far from supporting and nurturing Britain’s 4.8 million strong army of self-employed people, the Conservative Government appears to view them “as a cash cow to be milked for all they’re worth”. It has, in the last 18 months alone, slashed the dividend tax allowance, raised the prospect of lowering the VAT threshold and, in the last week, reneged on a pledge to abolish Class 2 NICs, which would have benefited self-employed sole traders by approximately £150 per year.
Marshall notes that this freelancer/contractor-punitive approach wasn’t always the case. The previous Conservative coalition with the Liberal Democrats ensured that Britain remained one of the easiest places in Europe to start a small business, with attractive rates of Corporation Tax to help catalyse innovation and drive the British economy. It also took firm action on the hardship inflicted on sole contracting professionals and small businesses by late payments, appointing a Small Business Commissioner only last year to help stamp out this blight.
However, Marshall believes the “mood music” has changed, with the current Conservative leadership seeming reluctant to boldly advocate for the crucial, positive role that small businesses play in the economy.
The planned IR35 reforms, Marshall warns, will unleash chaos on the private sector. Government could, however, do the right thing and offer an olive branch. As Marshall puts it: “Chancellor Hammond could say, ‘We’ve listened to business, and read your consultation responses. It’s clear business doesn’t want this, so we’re scrapping it.’”
While this remains unlikely, IPSE will continue to fight to persuade the Conservatives to rekindle their support for the engine of the economy: small businesses, freelancers and contractors.
To that end, IPSE is encouraging freelancing and contracting professionals to write to their MP using points included in a template letter, available here.