Now that the Budget has come and gone, and the ensuing raft of fiscal and legislative changes has passed us by leaving a sea of confused freelancers in their wake, it’s time to ask if the changes the Government made were the right ones.
Some of our contributors have made their thoughts on the subject crystal clear, but as far as we can tell nobody has polled the people it actually affects – freelancers and contractors – to get their thoughts.
It’s important to consider the changes in the context of the current financial climate. With HMRC trying to claw money back from small businesses while facing large cutbacks themselves, it certainly makes sense that they wouldn’t introduce a measure which they feel would cost them many millions of pounds in lost revenue.
However the Government are continually flapping their mouths about stimulating entrepreneurial spirit in the UK – shouldn’t they be working to abolish what many see as the biggest obstacle to prosperous self-employment?
As a reminder, the three IR35 reforms proposed in the Office of Tax Simplification’s Small Business Tax Review were -
- Abolish IR35 immediately, and begin looking into a long-term alternative
- Introduce a concrete “Business Test”, which will help freelancers and contractors establish their status
- Improve the way IR35 is enforced
George Osborne opted for door number 3, and HMRC’s plans to improve enforcement include introducing an IR35 hotline to help those in doubt. Is this the right approach? More importantly, will it actually improve the way IR35 is managed, and will it provide certainty to those freelancers and contractors who fall into the IR35 grey area?
Let us know your thoughts in the comments.
Photo by Juahui Huang – CC
