PRISM, the trade body for Umbrella Companies and other employment intermediaries serving contracting professionals, has unveiled plans to launch a strategic review of taxation sponsored by the private sector.

The trade body is now seeking support for this unprecedented move, which will draw on the expertise of an independent think-tank, the Social Market Foundation (SMF), to conduct a thoroughgoing study of contemporary engagement strategies.

Companies throughout the industry are being invited to lend their support to the initiative, which PRISM CEO Crawford Temple considers “essential.”

PRISM has consistently taken issue with the continual changes that contracting professionals and employment intermediaries face in a two-track tax system that fails to recognise their unique status as a third way of working, distinct from employment or self-employment.

Most recently, contractors have had to contend with proposed changes to IR35 rules and restrictions on tax relief for travel and subsistence expenses, which are typically considerably higher for this group of flexible workers than for their permanent counterparts. This is because many contractors are willing to traverse long distances to temporary workplaces.

Consequently, a major plank in the study will be to explore whether contracting constitutes a distinct, third form of employment that falls into neither of the two forms used by HMRC to determine tax status: employed or self-employed.

Commenting on the new initiative, Mr Temple said: “This is a crucial time for the sector and it really is essential that firms within the intermediary industry commission the kind of research capable of putting independent, sensible conclusions and recommendations to the Government.

“The contracting sector has been forced to put up with shifting sands for too long, which is no way to recognise the huge contribution made by workers who cement two of the UK’s greatest strengths, namely the flexible workforce and entrepreneurial spirit.”

The white paper eventually produced by the non-partisan SMF would explore the merits of recognising a third form of engagement, establish why employers choose to engage workers in this way, and evaluate how the flexible workforce is catered for overseas. The review would finish with a conclusion detailing its findings and recommendations for the Government.

The study will be funded by PRISM and its members and supporters, although they will have no influence over its findings. The hope is that the resulting white paper will encourage changes that bring stability and fairness to employment legislation.

PRISM has from its inception maintained that existing tax and employment legislation is outdated and that only a strategic review is capable of establishing facts and insights to assist the Government to level the playing field for all types of workers.

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