Good Governance Meets Political Reality – Political Reality Wins

March 20, 2017 Jeremy Mindell

The centrepiece of the March budget was the national insurance changes. In a Spring statement where almost all the measures which take effect in the new tax year had been announced in one of the previous three statements, the most eye-catching element was the proposed increase in class 4 national insurance.

As policies go, this was well considered, the Institute for Fiscal Studies had recommended this change in its Green Budget and looking ahead; something which Governments are accused of not doing, it was dealing with an issue which is only going to grow with the rise in the number of self-employed.

If the tax base is allowed to erode, we will all end up paying somewhere. The policy has now been kicked into the short-grass to await the publication of Mathew Taylor’s report on current work patterns. One element to note is that the major differential is not between the amount the employee pays and the self-employed person but the absence of the 13.8% charge on the company or business engaging the self-employed person. Expect action to be taken on this sooner or later and in the interim there will undoubtedly be a greater focus on the status of focus providers as HMRC seek to push more people into the PAYE and Employed NIC system.

Primondell is happy to run courses on the changes to IR 35, including the new provisions for the public sector and a review of recent case law.

2017 Budget, Budget, Posts

IR 35 and Status Issues

March 17, 2017 Jeremy Mindell

The new rules on IR 35 will affect many companies who have contracts either directly or indirectly with the public sector. The recent HMRC’s list of public sector bodies ran to about 40 pages. This course looks at how the new regulations will work in practice and in particular will look at:

IR 35 calculations
Defining relevant engagements
New issues with the public sector
Interaction with CIS
How to treat IR 35 income in the accounts
Using the new employment status indicator

It will also include a review of recent cases such as Pimlico Plumbers, Uber and Deliveroo, that have been decided on status in the courts and lessons that you can learn from them.

Even with the U-turn in the Spring budget on National Insurance rises for the self-employed, the Government has made it clear that it views the growing number of self-employed and one person businesses as a threat to the tax base.

It is likely that this will result in further rules on status and further challenges on status. A recent case involving about five lorry drivers resulted in a tax charge of a quarter of a million pounds.

All tax practitioners need to be aware of the risks and opportunities in this area.

2017 Budget, Budget, Posts

Philip Hammond under pressure before his first and last Spring budget

March 6, 2017 Jeremy Mindell

The political position for the Spring budget is perhaps the most interesting and unpredictable for a number of years. Following the Conservative success in the Copeland by-election, the Government is in its strongest position that it has held for many years.

However, the narrowness of the majority in the House of Commons means that false steps could cause problems. Philip Hammond will remember the concessions forced upon George Osbourne on tax-credits.

However, if he is to make a significant impact in terms of reshaping the tax system and take some unpopular decisions, now would be the best time.

Unpopular decisions might include targeting the self-employed for higher NIC or even introducing additional charges to fund social care. Even meeting the revised and delayed surplus target will require an additional squeeze on public spending. This comes at a time when the non-ring fenced departments such as prisons, police and social care are feeling the pressure.

This Parliament has already seen about £17 billion of tax rises, expect some more to be announced in the budget although probably not publicised!