Off-payroll legislation and loan charge set to devastate UK plc

Critics say the loan charge is having a devastating impact on some contractors who are the victims in it all, unwittingly having entered such schemes believing they were legitimate. 

The contentious loan charge debacle and concern over off-payroll legislation continues – with MPs squeezing in time between Brexit to debate the issues yesterday in Parliament, something welcomed by worker representatives.

Two debates have taken place in Parliament : MPs meeting to express their concerns around the off-payroll rules. And MPs also debated the impact of the loan charge on their contracting constituents – that is until rain stopped play as water began leaking from the roof into House of Commons.

“I was pleased to hear MPs debating the loan charge and the off-payroll legislation in Parliament yesterday,”  said Julia Kermode (pictured), chief executive of The Freelancer & Contractor Services Association (FCSA), “Both are highly contentious topics and are having a devastating impact on the flexible workforce.

“We have heard real stories about the impact that the loan charge is having on the lives of many innocent contractors who were unwittingly lured into toxic schemes. The government really needs to focus on these schemes which will continue to pop up until they shut them down once and for all. ”

Kermode said that it cannot be denied that the loan charge and the off-payroll reforms are intrinsically linked.

“Contractors have been lured into schemes because they would otherwise have faced a drop in their incomes once forced onto the payroll by public sector firms that have made blanket ban decisions on taking on contractors,” she said.

“The Government should take note of the impact the reforms have had on our public services and think twice before rolling out the same legislation into the private sector when we will see even more damage being done as the flexible economy along with UK plc will be hard hit.”

Dave Chaplin, CEO and founder of contracting authority ContractorCalculator was scathing about the Treasury responses in the debate over off-payroll legislation.

“We welcome the decision by numerous MPs to stand up for the contracting sector and expose the issues and pitfalls of the ill-conceived Off-Payroll reforms in Westminster,” said Chaplin, “It’s about time that this contentious legislation reaches centre stage along with the failings of HMRC’s Check Employment Status Tax (CEST) tool that a number of MPs brought up.

“However, it was clear that MPs were not convinced by the Treasury Minister’s response. While many questions went unanswered, John Glen MP, the Economic Secretary to the Treasury met others with standard responses which have emanated from HMRC and the Treasury throughout the consultation phase.  He read from the same old script and we heard typical stock responses that we have repeatedly heard from the Treasury of late.  Despite all the evidence against the reforms and HMRC’s tax tool, HMRC is in denial about the catastrophic impact the reforms have had on the public sector and will have on the private sector.  They simply will not listen.”

The discussion amongst MPs over the loan charge was rather more encouraging in its sentiment.

“Clearly there is now unanimous cross-party consensus that the Loan Charge breaches the rule of law and is retrospective. For years the victims of these schemes have been sitting on Loan Charge Death Row, and both HMRC and the Treasury have no compelling reasons why they should not now be set free,” said Chaplin.

“People have suffered enough, and there needs to be a full independent inquiry, in particular into the methods and techniques HMRC have used towards taxpayers, under the moniker of Behavioural Science. The loan charge is having a devastating impact on some contractors who are the victims in all of this, unwittingly having entered such schemes believing they were legitimate.  MPs have told of constituents losing their homes, facing bankruptcy and losing their livelihoods and, in some cases, tragically, their lives.”

Further reading:

The loan charge – did MPs understand the legislation passed?

HMRC under fire over IR35 off payroll legislation

This article first appeared in Small Business’ sister title Tax Guide

 

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