IR 35 needs changing

I am writing to the Chancellor to tell him he should drop changes which force self employed people to be taxed as employed. There is considerable worry about this amongst people who are self employed. A Conservative government needs to be on their side. The self employed make a great contribution to our economy and lack the support of a bigger employer if they lose a customer, fall ill or want to go on holiday.

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86 Comments

  1. Mark B
    Posted December 3, 2019 at 6:58 am | Permalink

    The Treasury and HMRC have been after the self employed for decades. Governments of all hues have pandered to them in the pursuit of more money to spend. They are killing the productive economy. Small business are the lifeblood of the UK economy and, it never ever is wise to hurt those who vote for you – witness the dementia tax of 2017. No one votes for political parties that make them poorer, so please stop these attacks on the self-employed, they are a small but vital part of the economy.

    • Martin in Cardiff
      Posted December 3, 2019 at 7:24 am | Permalink

      What needs to be done is to clamp down on the employers, who cynically demand that their operators be self-employed, but who also insist that they be available whenever and for as long as they might demand.

      Such operators are not self-employed, quite obviously. They are zero-hours contracted employees, but with no protections such as the working time directive, sick pay, etc.

      This, I doubt, will happen under Tory rule, however.

      • Edward2
        Posted December 3, 2019 at 11:38 am | Permalink

        They have.
        Have you not heard?
        BBC staff for example.

        • Martin in Cardiff
          Posted December 3, 2019 at 9:26 pm | Permalink

          “They” have because a new European Union law now requires governments to act under those circumstances, but they have three years to do so, by which time the UK will have left anyway.

          It’s easy enough to search.

          • Edward2
            Posted December 4, 2019 at 4:39 pm | Permalink

            The attack on self employed people in the BBC has been happening for years.
            The attack was led by the UK and HMRC.

      • Hope
        Posted December 3, 2019 at 11:41 am | Permalink

        Mark B,
        HMRC deliberately targeted the self employed because of the Tory govt high taxation policy in 2010- despite lying to us to the contrary of 80/20 split.
        The Tory govt became scared too many people would pay cash in hand and the taxman would miss out. So the Tory Govt decided to attack them.

        You might recall under Cameron one public sector body that increased in size, while every other public service was drastically cut, was HMRC which increased its staff by 2,000 employees while police officers were cut by 20,000, through vindictive behaviour of Mayhab. This cost her a majority at the last election because it became crystal clear the Tory Govt’s deliberately failed to keep us safe through open borders, mass immigration and cut in police officers. The Manchester bombing made that crystal clear to the public despite whatever the Tory Govt. said. Add to this the nothing has changed, deliberately failed to leave the EU and the majority lead quoted in an instant.

        We are on track for the same this election.

      • steve
        Posted December 3, 2019 at 7:17 pm | Permalink

        MiC

        Well said.

    • Posted December 3, 2019 at 9:11 am | Permalink

      Yes. Correct, also I’ve been canvassing. Nobody wants any sort of WA. Boris is forcing a new treaty on us for which he has no mandate and the public are not minded to give him a mandate. The Tories will not get a majority. Please God the DUP hope the balance of power again!

      • Hope
        Posted December 3, 2019 at 11:46 am | Permalink

        Lynn,
        And the Brexit party. In fact a majority with DUP and Brexit party might keep the Tory party honest. DUP already aware how the Tory Govt back stabbed them so will not be minded to give them the slightest amount of trust or wiggle room this time around.

        Johnson is right: no Brexit by October means extinction. I am fully behind him there. The Tory party deserve extinction for its treachery, lies and dishonesty.

        First action of Johnson should have been judicial inquiry with all powers open, whether minister or not, into dishonest Kitkat policy of Mayhab to hide true costs and ties to EU. Mayhab’s servitude plan was based on this and hence now Johnsons.

      • steve
        Posted December 3, 2019 at 7:15 pm | Permalink

        Lynn Atkinson

        “The Tories will not get a majority. Please God the DUP hope the balance of power again!”

        Well if they don’t then you’ll find Nichola Sturgeon will go into overdrive in her mission to wreak havoc on England.

        Which is fine by me, I have a right to reciprocate their hatred, and by God will do so with vengeance.

  2. Pete S
    Posted December 3, 2019 at 7:06 am | Permalink

    OT: Sir John, several weeks ago you asked an open question about energy. My reply was about the electricity infrastructure would not be good enough. Well, look at Falkirk gas problem. It is reported they are requesting that electricity usage is dialled back as the network can’t cope. I rest my case.

    • Fedupsoutherner
      Posted December 4, 2019 at 2:32 pm | Permalink

      Pete S. Energy was always going to be a problem in Scotland. Sturgeon, started by Salmond were so enthused by wind power they couldn’t stop erecting gigantic turbines everywhere. The developers were falling over themselves to get their wind farms built and receive the lucrative subsidies often for turning them off. They have a situation in Scotland whereby new wind farms can only operate for a percentage of the day but they get paid money to switch off. Madness or what? To add insult to injury they are still erecting windfarms which are slowly destroying the natural habitat of Scotland. I want to know what will happen when their two nuclear facilities have to shut down soon. They are already on borrowed time.

  3. Shirley
    Posted December 3, 2019 at 7:12 am | Permalink

    Look at who benefits from employing contractors, instead of employing people. That should be your target, not those who are forced into incorporating by the demands of big business.

    There has been a sustained attack on small business by all parties, not least by onerous red tape which big business can cope with, and small business cannot.

    • Al
      Posted December 3, 2019 at 2:08 pm | Permalink

      “Look at who benefits from employing contractors, instead of employing people.”
      You mean small businesses, charities, etc. who can’t afford say a full IT support or finance department (with the associated overheads of employing people, e.g. tax, pension etc), but can pay a contractor for a couple of hours a week/month?

      What should be clamped down on are large firms hiring someone for an employment role (often previously performed by an employee), preventing them working for other people, claiming rights to set their working hours, claiming rights to anything they create when not working on that company’s requirements, offering no right of substitution, but claiming that employee is a contractor. I have walked away from contracts like that (with ongoing clients and inhouse projects the “can’t work for anyone else when not on site for us” is a deal-breaker).

      Since the best way to prevent this would be to scrap IR35 and go after the hiring companies, not the contractors, I hold out no great hope.

  4. Me
    Posted December 3, 2019 at 7:13 am | Permalink

    I agree. Self-employment should be encouraged. Of course your customers become your boss in some ways, but some of us work better without a real boss. If not, we think we do, and that is a goal in itself. The rising of ones self.

  5. HarveyG
    Posted December 3, 2019 at 7:17 am | Permalink

    Am not interested in any of this politicking- will pick it up again after the election

  6. formula57
    Posted December 3, 2019 at 7:24 am | Permalink

    This Chancellor seems to need a lot of guidance.

  7. Roy Grainger
    Posted December 3, 2019 at 7:33 am | Permalink

    The BBC have destroyed the system by falsely claiming their staff are self-employed in order to avoid employer’s NI contributions – this loophole needs to be closed first before you consider changing IR35.

  8. Dominic
    Posted December 3, 2019 at 7:33 am | Permalink

    What is the point of your party? You’ve embraced all of Labour’s politics even to the point of demonising the self-employed though you bend over backwards for the public sector. It’s unprincipled, gutless politics.

    You continually give ground to the enemy (the Left, the public sector, the unions) simply to neutralise the immediate threat but they sense your weakness and always come back for more. You can never satisfy these people and the more you do they more embedded they become.

    The private taxpayer (who can’t fight back) is having to finance the Tories unprincipled and cowardly refusal to reform the immoral and deliberate waste of the public sector and who picks up the cost of all this? Yes, the self-employed hence the tax-grab

    Well done. You should be called New Labour

    • steve
      Posted December 3, 2019 at 7:08 pm | Permalink

      Dominic

      “You [cons] continually give ground to the enemy (the Left, the public sector, the unions)”

      Yep, they do. Scared of political correctness see.

  9. BCL
    Posted December 3, 2019 at 7:44 am | Permalink

    Please ask the government to reverse the catastrophic changes to the way dividends are taxed too.

  10. Hale Post
    Posted December 3, 2019 at 7:48 am | Permalink

    There is no Chancellor. There is an election on. So your post is just a silly stunt to cover up how little the Tories have done for the self employed in the NINE years you have been in power

    Reply There is still a government but no MPs

    • hefner
      Posted December 3, 2019 at 1:57 pm | Permalink

      That was not the point of Hale Post. Is that what you learned in Oxford? What a sad type you are!

  11. Narrow Shoulders
    Posted December 3, 2019 at 8:10 am | Permalink

    Sledgehammer to crack a nut, as ever from government.

    • steve
      Posted December 3, 2019 at 6:58 pm | Permalink

      Narrow Shoulders

      …….or perhaps a nut with a sledgehammer.

  12. agricola
    Posted December 3, 2019 at 8:26 am | Permalink

    Long overdue, the self employed are the seedbed of the economy
    .Those that harass them are the exact opposite. HMRC, The Treasury and government both political and civil service are totally feather bedded. They have no concept of walking the high wire without a safety net, as I have described the SE in the past. Anything you can do to get these pampered none producers off the backs of the SE will be much appreciated and of long term benefit to the country.

  13. Wildgoose
    Posted December 3, 2019 at 8:35 am | Permalink

    IT Contractors were ordered by the Inland Revenue to set up Limited Companies to “make their employment position clear”. This added to expenses and employment taxes, but these could be reduced by paying a portion of income as dividends.

    Big Consultancy firms objected to having to compete with individual contractors – they wanted all the money from embedding a team of programmers on site. And so they lobbied for IR35 to get rid of their competition. And it was given them.

    Yes, some people abused the system by paying out too much as divididends. So why was not the answer to have a rule limiting the amount of dividends that could be paid as a proportion of turnover – and apply that rule across the board to every company in the Land? A level playing field rather than one that was blatantly rigged in favour of the big boys?

    And because individual contract workers haven’t been stamped out we are now entering phase 2.

    No thought has been given to those who work on this basis away from home because there is no work where they live. And there is no concern that the response of large companies is just to sack their contractors and send the work abroad instead.

    So in what way do any of the main parties represent the interests of their individual constituents rather than their Corporate (or Union) overlords? In what way is this any different to the politicians who were obeying their EU paymasters to overturn our democratic vote in the last Parliament?

    • Sir Joe Soap
      Posted December 3, 2019 at 5:18 pm | Permalink

      Dividends can only be paid out of retained profits, so that is your limit.

      Of course in the past there was a benefit in terms of pension contributions which was based around earnings, not dividends. Tory government has cut that right down from £260K to £40K I think. Why not bring that back? Low earned income = low maximum pension contributions.

  14. John B
    Posted December 3, 2019 at 8:36 am | Permalink

    The most egregious aspect of IR35 is that the taxpayer is always in doubt as regards their status. HMRC have a long list of complex criteria by which they establish your status under this tax regime. They absolutely refuse to settle this status in advance so the self-employed tax payer enters into years of uncertainty in addition to the normal vagaries of their chosen career. The consequences of assuming their status incorrectly are catastrophic; debt, worry & even bankruptcy. No wonder IR35 is so hated by those subject to it.

    • Sir Joe Soap
      Posted December 3, 2019 at 5:21 pm | Permalink

      It’s not that difficult. If you’re setting your own rates, working for more than one customer, and using your own kit and making the decision around which work you do when, you’re self employed.

  15. ASW
    Posted December 3, 2019 at 8:43 am | Permalink

    For the self employed, obtaining timely payment especially from some large businesses is time consuming and can bring about demise of a small enterprise. Large organisations would unilaterally extend payment terms from 30 to 60, 90 and 120 days; the accounting profession ensured that their cashflow was funded free by the weaker party. And we all know how HMRC treat taxes due on invoicing. The Bolton Report 1963 highlighted the problem but no government has ever grasped the nettle. When one finally does we will know we have an enterprise friendly administation.

    • Fred H
      Posted December 3, 2019 at 7:27 pm | Permalink

      You should include late payment % terms……Might frighten off clients of course.

  16. Lifelogic
    Posted December 3, 2019 at 8:52 am | Permalink

    Indeed it does, but so much else need changing to0, Stamp duty rates, the double taxation of landlord interest that hits tenants, inheritance taxes at such absurdly high levels, the pension rules that can tax people at 90%+ (and cause the NHS such issues with staff & cancelled operations).

    Just undo anything done by the dire tax, borrow, make absurdly complex and piss down the drain Chancellors Major, Brown, Darling, Osborne and Hammond would be a good starting point. We need to get taxes down from pushing 50% of GDP to about 25% of GDP and to get freedom of choice into health care, education, the media and housing. Just a safely net for those few who need it.

  17. Alan Jutson
    Posted December 3, 2019 at 9:05 am | Permalink

    A sensible move, it was introduced out of envy and spite.

    We need to encourage those who take risks with their own money, because when they succeed we all benefit, as they employ others, and invest and spend more.

  18. Posted December 3, 2019 at 9:09 am | Permalink

    Let’s have legislation specifying that the self-employed cannot be taxed at all if their ‘earn’ less than the minimum wage! My tenants often take home less and especially when they hit the far-too-low VAT threshold. Let’s have commercial property landlords exempt from Business Rates when their shops are empty – then they might have some money to refurbish and maintain the fabric of these buildings (if they are exempted from VAT for fixing the roof) and have a chance of reletting. Let’s have professional 7 day a week traders in mobile butchers vans etc forced to rent a shop or sell in the ‘weekly market’ 1 day a week by making One day a week official market day throughout the U.K.

  19. glen cullen
    Posted December 3, 2019 at 9:18 am | Permalink

    Its about choice, I am self-employed and when I decided to transfer from a safe employment scheme to a high risk venture knowing that I would be responsible for my own sick-pay holidays etc.

    We’ve always had a number of decently paid self-employed in the UK and its never been on the horizon nor an issue, it has in fact over years been the norm in our economy. We never needed a definition from HMRC or the courts until now.

    Now the situation and patterns of self employment has change and dear I say this has been largely due to mixed messages from government, poorly paid self-employed (delivery drivers, taxi drivers etc) and greedy companies replacing employed for self-employed.

    If companies had to pay me a percentage of pension, holiday, paye etc they would never have engaged me. Most self-employed invoice a higher daily rate to off set theses costs and risks

  20. Lifelogic
    Posted December 3, 2019 at 9:21 am | Permalink

    Good to hear some sense from Farage on Radio Five Live now interviewed by Nicky Campbell. Farage one of very few politicians who is a climate realist. Nicky Campbell even came out with the “BBC thing” 98% of scientist B*** Sh*** yet again. The BBC propaganda on this issue is totally one sided and absurd. Climate realist and sensible scientists seem to be banned.

    The Boris deal is clearly not Brexit as Farage points out. Nicky Campbell is clearly another “BBC group think” dope to his core, another art graduate (History at Aberdeen it seems).

  21. Sharon Jagger
    Posted December 3, 2019 at 9:27 am | Permalink

    I have absolutely no idea how business tax works…but I do know that during phone ins about small business, business owner all complain that they are running faster to stand still.

    We all know that the EU idea of business is for it to be private but heavily regulated (which presumably includes various taxes to keep control of them) . That will not, and never will,
    leave, the backbone of our country – small and medium businesses – in any fit position to thrive.

    So taxation as an employee, is against a self employed person….they have to fund themselves for sick and holiday pay, so to tax them otherwise does seem unfair.

    • a-tracy
      Posted December 3, 2019 at 11:08 am | Permalink

      The small business owner with say 2 staff has to not only fund his own holiday pay and statutory sick pay, sick pay holiday, nest etc. s/he has to fund the other two members of staff’s benefits package and charge rates accordingly, plus pay employers NI?

    • Lifelogic
      Posted December 3, 2019 at 11:59 am | Permalink

      Not only that if they fall ill or something and thus file anything late (even if no tax was ever due) they get mugged with large fines yet again!

    • Lifelogic
      Posted December 3, 2019 at 12:55 pm | Permalink

      “how business tax works“ well the more you tax the businesses have to invest and the less is thus invested so you have a smaller cake to tax next year, people earn less and you become less and less competitive in the world. Mad even worse by endless red tape and expensive green crap energy.

      • turboterrier
        Posted December 4, 2019 at 7:23 am | Permalink

        LL
        Trump knew what he was doing going flat out for fracking.

  22. Gareth Warren
    Posted December 3, 2019 at 9:41 am | Permalink

    The tax system needs to be simplified, but why should self employed be taxed less than employed?

    Doing this immediately encourages tax scammers such as highly paid people at the BBC to declare themselves as self employed. It also encourages companies to employ contract rather than permanent.

    Here I disagree, simplified tax, equal weighting and less tax to employ someone is what we need.

    • bigneil(newercomp)
      Posted December 3, 2019 at 11:35 am | Permalink

      A program a while ago showed many “stars” making programs were being paid abroad to lessen their tax. It is WAY past the time when the BBC tax/ license fee – to be abolished.

      • Lifelogic
        Posted December 4, 2019 at 3:54 am | Permalink

        Grossly unfair competition from a lefty, climate alarmist, pro EU, anti-democratic propaganda outfit staffed by dopey, over paid, endlessly interrupting, misguided lefties like Marr, Maitlis and hundreds of similar, group think, lefty art graduates.

      • turboterrier
        Posted December 4, 2019 at 7:19 am | Permalink

        BN nc
        Totally in agreement

    • Bob
      Posted December 3, 2019 at 11:42 am | Permalink

      @Gareth Warren
      Being self employed is very different to working as an employee Gareth, therefore the tax treatment is different. Self employment is more like running a small business.

      A sick note is of no use whatsoever to a self employed person.

      • steve
        Posted December 3, 2019 at 6:55 pm | Permalink

        Bob

        “A sick note is of no use whatsoever to a self employed person.”

        and not much use to most employees these days, since most employers don’t pay for sick absence……which means people go to work when they’re ill and pass their germs to others.

        SSP should be scrapped and it made law for employers to pay sick pay.

        Better to have one person off sick and on pay than a whole workforce operating less efficiently.

        But there you go, barrow boy bosses never can see past the end of their noses.

        • Bob
          Posted December 3, 2019 at 8:54 pm | Permalink

          You can get £94.25 per week Statutory Sick Pay if you’re too ill to work. It’s paid by your employer for up to 28 weeks.

          You need to qualify for SSP and have been off work sick for 4 or more days in a row (including non-working days).

          You cannot get less than the statutory amount. You can get more if your company has a sick pay scheme (or ‘occupational scheme’) – check your employment contract.

          • anon
            Posted December 4, 2019 at 11:18 pm | Permalink

            “Self employed” tax rates apply over the years

            SSP only applies when someone is sick? People are not sick all the time?

            Combine NI&Paye into a Flat tax.

            Anyway equalising rules would naturally mean SSP rules with claim directly against the DWP.

          • Bob
            Posted December 5, 2019 at 4:49 pm | Permalink

            “People are not sick all the time?”

            Not if they’re self employed.

            Public sector has the highest rates of sickness absence.

    • Qubus
      Posted December 3, 2019 at 11:54 am | Permalink

      Do you realise that self-employed people are not all tax-dodgers who take dividends instead of a proper wage. Do you realise that the self-employed do not enjoy the three weeks-plus holidays with pay, plus statutory holidays, that the employed get, that if they are ill, they lose money every day they do not work. Yes, the self-employed can insure against this, but it costs an arm and a leg to do so.

    • agricola
      Posted December 3, 2019 at 4:58 pm | Permalink

      People who are genuinely self employed are running a business. Businesses have expenses which need to be offset against gross income to arrive at nett income. Nett income is taxed from memory just like an employed person. Allowable expenses had to be genuine. If you look into parliamentary and euro parliamentary expenses you will find life is very different. Parliamentarians make rules for themselves and different rules for everyone else.

    • Mike Wilson
      Posted December 4, 2019 at 12:56 am | Permalink

      No holiday pay. No sick pay. No unemployment benefit. Lower state pension.

    • Andy Donaldson
      Posted December 6, 2019 at 12:43 pm | Permalink

      @ Gareth – “why should self employed be taxed less than employed” – they AREN’T that’s a myth – since 2016 dividend rule changes the overall tax rate is virtually identical, in fact the self employed person (if they are working under their own company) pays slightly MORE tax above £50K and below the difference is around £2k which is usually wiped out with accountancy expenses etc. https://www.contractorcalculator.co.uk/comparing_taxes_contractors_versus_employees.aspx
      On top of this as has been pointed out there are no full time employee benefits like holiday pay, sick pay , pension contributions, medical cover, bonuses or in many case no out of pocket expense payments.
      Most contractors (certainly in my industry of Finance IT) do it because
      1) The client will usually pay a premium because they don’t have overheads or the risk of maintaining a full time employee
      2) It is a more flexible way of being paid – i.e. you can choose to not take holidays and be paid to work, you can choose to pay a bit more or a bit less into covering the lost benefits
      3) There is much less corporate politics to worry about
      4) You can move around more easily.

      I was a permy for nearly 30 years then I started contracting and I pay far more tax overall now due to the premium rate level, or rather I did until IR35 forced me out of my contact early due the bank simply chucking out all contractors.
      If I’m forced back into being a permy the down grading of my income will result in much less tax not more as HMRC seem to think, that’s if I can get a job at all as many have simply disappeared to cheaper overseas consultancies.
      This is a massive own goal by HMRC and the Govt and its had massive impacts on a lot of people – the very people who SHOULD be supporting a Tory Govt.

  23. Bob
    Posted December 3, 2019 at 10:24 am | Permalink

    I agree with you proposition Sir John, but it disturbs me that you would need to explain this to a conservative Chancellor.

    • Lifelogic
      Posted December 3, 2019 at 12:07 pm | Permalink

      We have not had a Conservative Chancellor for very many years indeed – Major, Clarke, Brown, Darling, Osborne, Hammond were all misguided tax, borrow, make ever more complex, spewers of red tap and essentially piss down the drain lefties. Leaving us with the highest tax burden for 40 years and a weak economy as the direct result.

      As to Javid I reserve judgement, but the signs so far are not very encouraging. 3% additional stamp duty proposed and the cancelling the reductions in Corp. Tax. Also HS2 does not seem to be being killed, nor all the moronic green crap renewable subsidies. No sensible plan for the NHS either.

    • Fred H
      Posted December 3, 2019 at 7:25 pm | Permalink

      Bob – – or indeed dozens MPs of Sir John’s party who are simply out of touch. Boris’ gaffe ‘offering tax cuts to the comfortably off’ before anything for the middle and low income millions says it all.

  24. ian wragg
    Posted December 3, 2019 at 10:30 am | Permalink

    What about the new death tax which means probate fees are levied according to the value of the estate. This is scandalous.

    • Alan Jutson
      Posted December 3, 2019 at 11:07 am | Permalink

      Ian

      ” Probate tax”

      That has been postponed for now, due to the outrage it has caused.

      I was not aware of it being postponed until I applied for Probate for a family member only recently (October 2019).

      I agree the idea was outrageous, just another inheritance tax, when even that tax has too lower threshold.

    • bigneil(newercomp)
      Posted December 3, 2019 at 11:41 am | Permalink

      I reckon the govt could get a nice big family of “newly arrived in a dinghy for free everything lives” in your pad Ian. You’ll be forcibly shoved into a “home” while what you worked for goes to someone who didn’t.

    • Stred
      Posted December 3, 2019 at 11:47 am | Permalink

      They were supposed to be dropping this. It’s not in the manifesto. Suspect another weasel.

    • Lifelogic
      Posted December 3, 2019 at 12:09 pm | Permalink

      I thought this plan was scrapped? A good thing too! They are still ratting on the £1million threshold each.

      • Lifelogic
        Posted December 3, 2019 at 12:09 pm | Permalink

        For IHT that is.

      • Lifelogic
        Posted December 3, 2019 at 12:58 pm | Permalink

        Yes it was scrapped, but doubtless post the election they will revive it or come up with some other mugging taxes or fees.

  25. Lindsay McDougall
    Posted December 3, 2019 at 10:43 am | Permalink

    The bigger scandal is for self employed people to be taxed in advance of receiving their earnings, based on estimates. As per usual, any estimate by HMRC is based on extrapolating past earnings and can be wildly wrong. They tried it on with me once and I wrote back saying that my current year’s earnings would be nothing like the previous year’s, so they could whistle for their money. They threatened me with interest charges to which I replied “You can’t demand interest payments on money that isn’t owed.”

    Eventually, I was able to put a stop to their nonsense by writing “My status is retired”.

    Self employed people should be taxed IN ARREARS.

    • Alan Jutson
      Posted December 4, 2019 at 8:20 am | Permalink

      Lindsay

      Very true, self employed earnings are variable, they do not always go up or increase.

  26. Iain Gill
    Posted December 3, 2019 at 10:54 am | Permalink

    You need a urgent announcement re IR35.

    Same with financial regulation, the corrupt and biased Financial Ombudsman Service needs urgent action. Properly independent complaints process, proper appeal process, root and branch reform.

    Same as immigration needs urgent substance to the policy. Continuing to print uncapped ICT visas for the Indian outsourcers to flood the country with skills already in oversupply, and tax them less than locals, its got to change.

  27. Rhoddas
    Posted December 3, 2019 at 11:10 am | Permalink

    Many sage comments above point to the salient facts that the Tories have over 9 years turned the IR35 screw after Labour who introduced it. I agree fully with those who say in this regard the Government look like New Labour and indeed why does the new Chancellor need to be told to rollback all this lefty nonsense!

  28. JamesG
    Posted December 3, 2019 at 11:19 am | Permalink

    Thanks but IR35 needs totally scrapped not changing. All we need is a tax status of sole trader with limited liability as in France. Then HMRC can stop wasting so much money on investigations: I doubt IR35 even retrieves as much as is spent on it. It was just another of Gordon Browns half-baked ideas made 10x worse by Hammond.

  29. Barbara1
    Posted December 3, 2019 at 11:57 am | Permalink

    When I first became self employed c. 1985, the Revenue told us there was a rule that in order to qualify as truly self employed, you had to have at least three separate clients over the course of a year. This seemed to everyone an eminently sensible rule and I wonder what happened to it.

    • Addanc Monster
      Posted December 6, 2019 at 7:57 pm | Permalink

      Not if your are a professional engineers where projects can last years!

  30. Stred
    Posted December 3, 2019 at 12:01 pm | Permalink

    They were supposed to be dropping this. It’s not in the manifesto. Suspect another weasel.

  31. Dan R
    Posted December 3, 2019 at 1:44 pm | Permalink

    The past nine years has been full of ridiculous policy change from your government and I’m sure you’re quite embarrassed. The whole of society has been hit by stupid policy which has impacted hard. No one has been immune. The stifling of innovation by start ups struggling because of the con got has been one which will not be forgotten by many. IR35 has been just a snippet for those who are willing to take risks.

  32. Ian @Barkham
    Posted December 3, 2019 at 3:33 pm | Permalink

    I have been self employed 10 years or more, all by choice. That’s the declaration out of the way.

    Sir John you like others, although some are a lot worse, miss the point. The rise in the so-called self-employment (gig economy) is as a result of the whole the UK tax system being based around successive governments wanting to tax to fund giveaways to win their next election. They attack the soft options, the areas were the enterprising are to busy to complain. They introduce back door costs that are not called taxes but the public has to pay them anyway. The point as Parliament sees it, if it is not called a tax it can’t be a tax so not a governments fault.

    Bear in mind among other things UK energy costs are high because of punitive costs applied to the industry by Government. Another element that makes the UK a high cost place to be.

    That leaves those playing their part in a competitive world and actually playing their part of advancing and contributing to society, looking to survive, having to search for different ways to stay competitive or go under. So the inclination of Parliament to put the blame there is misguided.

    The UK government has made the employed, self-employed. The changes to IR-35 just mean the self-employed will become companies. Then they will be employed and their companies will go under regularly and no tax will get paid. Yet the exchequer(taxpayer) will have to pay the NHI, redundancy etc.. Then they will rise as offshore companies and so on. Tinker away, and tinker away to no avail when the real answer is to un-complicate tax, tax everyone equally and hey ho more tax gets paid.

    Tax should have a direct purpose of creating a framework, were it causes society to grow and reach its full potential. With every section paying an equal and equitable portion – nothing more nothing less. Political tinkering, with the attention always being focused on the next election is not ideal. That’s the area that needs to be stamped out.

    For the most part once one section gets a subsidy another wants it, then it has to be balanced out to others and expensive administration and controls put in place. Are they really saying there business is dead if the taxpayer doesn’t fund it?

    All tax collected and redistributed should in the ideal world be seen as investing in the way that there is a tangible return that can continue the reinvestment for growth. There would be no need for exemptions, handouts or subsidies if tax was equal in the first place.

  33. John Hatfield
    Posted December 3, 2019 at 7:55 pm | Permalink

    The CBI is not interested in the self employed.

    • Al
      Posted December 3, 2019 at 9:18 pm | Permalink

      Given the number of self-employed contractors the CBI firms hire, and insist are not employees, you’d think they’d be all for anything that streamlines the process.

    • Lifelogic
      Posted December 4, 2019 at 3:41 am | Permalink

      Nor, it seems, are the CBI really interested in the UK’s interest either, they are more concerned with protecting the vested interests of multinationals. I disagree with almost everything the wrongheaded, BBC favourite, Dame Carolyn Fairbairn ever says. Probably why she is such a BBC favourite (being totally wrong headed and female always helps with the BBC).

  34. ukretired123
    Posted December 3, 2019 at 9:40 pm | Permalink

    Big companies rely on flexible people to bail them out out of the many crises they encounter.
    And there have been many – and many untold to save embarrassment.
    I believe this will continue due to complexity of modern organisations.
    From my experience few understand self-employed because unless you have been there you will never know the inside track.
    50% of new businesses fail within a year!
    Self discipline, 200% determination, self-sacrifice, going the extra mile, Swan like yet paddling like hell until you have a track record, forever learning, recording your accounts, chasing money forward planning etc, etc, etc.
    Holidays? In the first few years forget it and don’t get sick because the treadmill awaits.
    The last thing you need is someone from a bank asking is this your hobby? True!
    Neither do you have time to research IR35 or the UK Tax Handbook and latest years Budget changes.
    All the whole ensuring expenses stay minimal and income and cash is coming in.
    After 20 years I was so relieved to be retiring but not helped by the Equitable Life pension scandal which deprived many others too. At least recent Self Invested Portable Pensions SIPPs allowed me to control my meagre residue.
    So self-employed need all the help they can and a good partner to back them up when the going gets tough, as it often does.
    You are only ever as good as your last job.

  35. Big John
    Posted December 4, 2019 at 2:20 am | Permalink

    This whole IR35 crap, is created because people are treated differently depending on how they get paid, according to tax rules created by the govenment.

    It can’t be that difficult to simplify the tax rules so everybody is treated the same.

    eg :-

    PAYE people being able to claim against tax the cost of going to and from work.

    PAYE people paying tax on work benefits (Non contributory holidays, pensions, insurance etc).

    Scrap VAT, this seems to be, only a tax aimed at anybody who is too poor to register themselves as a company.

    • a-tracy
      Posted December 5, 2019 at 11:27 am | Permalink

      “PAYE people paying tax on work benefits (Non contributory holidays, pensions, insurance etc).”

      Hey? if the self-employed operative takes two weeks off and uses his gross income to cover his pay for that holiday period he doesn’t pay extra tax on it? If the self-employed person puts some of their gross income into a personal pension they don’t pay extra tax on it? Not sure what insurance you mean?

  36. Richard416
    Posted December 4, 2019 at 8:12 am | Permalink

    I hope you are successful and will help the smallest businesses to thrive and grow.

  37. Ex-Tory
    Posted December 4, 2019 at 12:24 pm | Permalink

    Over the years, governments have put more and more burdens on the self employed (in their capacity as businesses and suppliers) and employers, to the point where the disparity in treatment between employees and the self-employed has become so iniquitous that problems will continually arise. (The Uber drivers’ dispute is just one case in point.) Ironically in a way, governments have also been increasing National Insurance contributions, rather than risking unpopularity by raising the basic income tax rate. This has complicated things further by highlighting the difference in treatment between dividends and salary. The whole thing needs sorting out, but in the meantime Sir John’s letter makes sense.

  38. Javelin
    Posted December 4, 2019 at 8:15 pm | Permalink

    The way large corporates work is that highly paid contractors are brought in on a per project basis to bring in their technical expertise. The large companies can then compete with other companies from other countries. These technical contractors may be in the project for 6 months or 3 years while the project is completing. Once complete the large company will go into a different mode and release all the contractors.

    This keeps the UK in the forefront technically. If you stop it you may get a few quid in tax but you will lose your companies. It’s like plucking the golden gooses feathers and then being surprised when your geese start dying.

    If you don’t know how big business works then you need to realise that temporary contractors have no long term career in the company and are effectively one man companies that are independent of the company they work for. There is no job security, no rights, no duty of care., no holiday pay, no sick pay etc etc.

  39. Arnie from Newington
    Posted December 5, 2019 at 6:45 pm | Permalink

    The gap between the amount of tax and national Insurance paid by employees and the self employed paying a combination of salary, dividends and corporation tax is far too big.

    I really don’t see why the self employed who go somewhere do something are so much better than employees who go somewhere and do something.

    • Andy Donaldson
      Posted December 6, 2019 at 1:25 pm | Permalink

      As per Gareth’s comment and my response above the is NO big gap – everyone seems to forget that contractors also pay Corporation tax before they take any dividends.
      Please explain where this BIG difference is or are you just repeating the same tired old myths

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

    Promoted by David Edmonds on behalf of John Redwood both of 30 Rose Street Wokingham RG40 1XU

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