The lifeblood of an enterprise economy comes from the ability of the many to set up and run a business for themselves if they wish. A vigorous private sector has easy ways for new businesses to be born, and sensible ways for failing businesses to be wound down or stopped.
The ability to set up a business rests on self belief, access to property, skills and capital, and a favourable balance of risk and reward for doing so. The UK has a relatively good rate of new business formation compared to the rest of the EU, but falls behind the USA in capacity to set up and grow businesses, especially beyond a certain small scale.
The first thing the government should do is to advise schools and Colleges that self employment is a serious career option. Indeed, the brightest and most energetic students are above all the people that should be asked if they will set up a business of their own rather than seeking the comfort of a cosy job with a large corporation or state actor. Enterprise should also be for the many, as many people who are not interested in academic subjects or who do not excel at passing exams may be excellent at understanding customer needs and meeting client requirements.
People training at Colleges to be plumbers, electricians, cooks, house maintenance people and other  skills should be offered supporting courses on how to offer their services through their own business.
The government needs to revisit IR35. It should be easy to gain self employed tax status for all those who are offering their work to clients and customers other than through someone else’s company as a company employee.
The government should raise the VAT threshold higher so people can increase their turnover more before needing to get help and advice on how to comply with VAT.
The government should derate small business premises altogether so starter units are rates free.
January 4, 2020
Good morning
A low tax, low regulation economy is a must. The EU stiffles competition through over regulation. Competition as most here know is a key driver to innovation which creates new opportunities for more business and real growth.
It is hightime that profit should be seen as a good thing and not something the State can use to fund its hyperexpensive white elephants.
January 4, 2020
Mark B
“It is hightime that profit should be seen as a good thing”
…..as long as the distinction between profit and unmitigated greed is understood.
January 4, 2020
Again – I ask – which regulation do you want to scrap. None of you ever answer except free movement, something or other to do with fishing and VAT on tampons. Youâve all had 4 years to work out which regulations you want axed and none of you can think of any.
January 4, 2020
Still got no memory of the many replies you have had then Andy?
Why do you keep asking the same question when you have had so many previous answers.
January 4, 2020
It’s called cognitive dissonance Edward2 đ …
zorro
January 4, 2020
OK then in the current context, and with 10 seconds thought:
GDPR for limited companies with say 2 employees. Ditto EC sales lists. Ditto legislation restricting what I can place in contracts freely made between the founder and his two employees. Ditto not being able to employ English speaking employees from the commonwealth as easily as more highly skilled non-English speaking EU employees.
Don’t try to pretend people are stupid.
January 4, 2020
less highly skilled…
January 4, 2020
It is UK law that prevents you employing Commonwealth people. Thatâs nothing to do with the EU.
Law – both UK and EU – prevents you putting unfair terms on contacts. For example that the employee has to work 24/7 or provide the owner with a pound of flesh once a month. What unfair terms do you want to put in contracts?
January 4, 2020
Andy, you regularly repeat this claim (do you copy and paste or type it afresh each time?). However, putting it bluntly, it’s not true. In the past you have been given many examples. Try the following search criteria to refresh your memory:
site:johnredwoodsdiary.com Andy regulation
January 4, 2020
Not true.
Collectively you have given a handful of examples – you always repeat the same ones – many of which are nothing to do with the EU. You are the ones who go on about all the stifling EU rules and regulations with ever begin able to name any. I would expect you to be able to list thousands of the things but, so far, collectively you have reached about 4.
January 4, 2020
We have listed many.
But you refuse to remember any.
January 4, 2020
It is you, Andy, who are being untruthful. Using the simple search I suggested I only had to read 3 or 4 past diary entries to find many examples of relevant regulations that you had been told of.
January 4, 2020
You’ve obviously never come across EN standards, Andy. We gave up our British Standards that in most cases were way ahead of the EN equivalents, and had to redesign to lower standards which were almost all based on German DIN and TuV standards. This opened up the UK market to German producers and cost us many jobs. There are thousands of these examples. Your posts continue to show your ignorance on most matters. Try for example buying or influencing your way into Oxbridge without the required qualifications
January 4, 2020
They perhaps want to be able to buy noisy, inefficient vacuum cleaners and expensive-to-run tungsten light bulbs, Andy.
My 650W Henry works a treat, with 250W in hand, incidentally.
No one’s stopping them from swimming on beaches with no blue flags either, so I can’t see the problem otherwise.
January 4, 2020
It will take you twice as long to dry your hair or clean your carpet with a machine that has half the wattage.
So you end up using the same amount of electricity.
Noise is about design quality.
It is one of the most ridiculous and pointless EU regulations.
January 4, 2020
Marty – -but if people want to buy noisy, inefficient devices and the manufacturers don’t go out of business – why not?
Personal choice – offer a product see if consumers buy. QED.
January 4, 2020
Martin
I want to buy vacuum cleaners based on efficiency not just power. And light bulbs that are not filled with murcury.
January 4, 2020
LED bulbs are not filled with mercury.
As I say, the Henry is worlds better than those ugly, heavy, noisy, inconvenient, expensive, over-hyped things made by that guy who recently went to Singapore.
And there’s 250W in hand to the European Union spec for domestic vacs.
That figure was well calculated.
January 5, 2020
Many Low energy bulbs are classed as hazardous waste due to the mercury element in them.
January 4, 2020
Andy, I’ll produce my list (again) if you list all the regulations which you think the UK could not possibly have unless we were ruled by the EU.
January 4, 2020
Why are you still campaigning as if there were a referendum to come?
There is nothing standing in the Leavers’ way whatsoever now.
Explain what you are going to do, therefore, which will make life so much better for most people in the UK than it was as a member of the European Union?
January 5, 2020
Martin, You have made hundreds of comments here campaigning to block, or ignore, our 2016 Referendum decision to separate from the EU. It is you that has been campaigning for Remain as if there was a referendum to come!
I am not in a position to “do” anything – I do not have executive power. But I do now have democratic power. And that’s why Leave is better. Independence and self government are essential – democracy is only possible within a nation.
January 4, 2020
Andy. Specifically I should like to see all the regulations regarding the labelling of honey for sale by private individuals and small clubs limited to the absolute minimum.
The way forward once we are out it to ask groups, in this case the British Beekeepers Association, to review the regulations with which its members are required to comply and state the minimum which should apply. It is is particularly important that the views of the big incumbents be ignored in favour of listening to the views of the interlopers.
January 5, 2020
Andy,
This is an initial global list which would remove thousands of objectionable EU rules:
1. The EU’s VAT â to be replaced by a retail purchase tax. Like most EU schemes VAT is unnecessarily complex.
2. Copyright Directive â used for EU censorship of the internet, and even opposed by EU universities.
3. GDPR â a sledgehammer to crack a nut.
4. EAW â the odious and sinister EAW â beloved of Theresa May â is contrary to habeas corpus and should be abolished entirely.
5. CFP – recover control, and stop throwing dead fish back into the sea.
6. The EUâs tariff schedule â inappropriate for us, to be replaced by a tariff schedule to suit the UK.
7. No foreign migrants to the UK to receive any free benefits (NHS, schools, etc) for a minimum of 15 years. Charges/taxes to be collected towards the capital cost of the infrastructure, in addition to normal taxation for the running costs.
8. EU (non-Schengen) free movement to be eliminated.
9. Consumer protection to be based on the sound principle that a product should be fit for purpose. This sweeps away a myriad of EU rules.
10. State aid for failing business (eg steel) to be available to protect UK interests. Typically on a temporary basis (eg Rolls-Royce 1971 Ltd, some banks a decade ago), but for strategic industries up to the maximum allowed under WTO rules, rather than EU rules.
January 4, 2020
Mark B
No, the EU does NOT ‘stifle’ competition through over regulation. By making all members adhere to high standards of quality it has acquired a reputation for reliability across the globe and so become the world’s largest, wealthiest, economy.
Not: ‘Buy Chinese, buy twice’.
Is that what you think we should aim for?
January 4, 2020
mh – – ‘the worldâs largest, wealthiest, economy. ‘
So give us the world top 4 areas by economy size, by millionaires, by growth ( say last 5 years).
January 4, 2020
You’re dying to tell us Fred, so please do.
January 4, 2020
mh tells us EU wins those accolades. I think it is reasonable to ask compared to which others? Or do we favour grand claims with no evidence whatsoever? Make the claim- you should provide evidence and on what basis.
January 4, 2020
Personally to judge a country by the number of millionaires it has is usually one that is to be avoided.
Oil rich billionaires and kleptocrats with citizens living in mud huts?
January 4, 2020
Best to live in a nation with lots of millionaires that one with not so many Margaret.
Remember that in the UK the richest 1% pay 28% of all income tax.
Golden gooses are worth keeping.
January 4, 2020
I believe Quatar comes first in some tables, depending on what criteria are being used, then USA, China, Singapore, Germany, the UK.
January 4, 2020
Margaret H, You mean like Volkswagen diesels?
January 4, 2020
NickC
Oh goody! You found one.
(Although I don’t know much about the emission scandal rules they broke, I bet most of these emission regulation safety precautions were imposed by the EU in the first place.)
January 4, 2020
It was the USA who first noticed that VW’s diesel engine management software cheated emission tests and therefore violated US law.
January 4, 2020
Other examples are antifreeze in wine and horsemeat substituting for beef.
January 4, 2020
Yes, some at that abattoir in Todmorden got prosecuted for that, didn’t they?
That’s what happens when local authorities can’t afford to employ enough public health inspectors and enforcers, I suppose.
It doesn’t matter how good the European Union’s regulations might be.
January 5, 2020
Martin, Horsemeat found in tins of “corned beef” from the France area of the EU. Eggs from the EU’s Netherlands contaminated with salmonella. Insecticide contamination in eggs through 15 EU sub-states. Etc.
January 5, 2020
Yes, that’s the trouble with private enterprise, Nick. If people can make more money by fraud then some will, whatever the law against it, whether made by the European Union or by the nation.
Good, all-British BSE, anyone?
January 6, 2020
Martin, You’ve missed the point. EU rules are not as wonderful as you and MH suppose, and I gave examples to show they aren’t.
January 4, 2020
You tell us Margaret, but I think that you will find a lot of Chinese goods with the CE mark being sold in the EU so, by your definition, they must be brilliant, as goods for the EU market (all hallowed Single Market) must adhere to the highest standards. Wouldn’t you agree đ ?
zorro
January 5, 2020
zorro
You can buy what you like as long as the country of origin is given. Up to you if you prefer to buy cheap rubbish.
January 5, 2020
Margaret H, But the point you made was that EU regulations (supposedly) prevent the sale of “cheap rubbish”.
January 4, 2020
Strange observation. On joining the EU the UK had to lower its standards to fall into line, how does that square with your train of thought.
January 4, 2020
Margaret
Don’t buy a German or French car and expect it to be efficient and reliable….
January 5, 2020
Know-Dice
Not a view that is shared by their owners. A report in today’s Mail Online says that among the 10 most reliable models in Britain according to drivers who own them 2 are German, while 4 German models (2 Volkswagen, BMW, Mercedes) and are rated as the fastest selling in 2019
January 5, 2020
Margaret H, Are the emissions from German cars “reliable” too?
January 4, 2020
Profit can be a good motivator for some people but not everyone. Social enterprises requires just as much gumption, inventiveness and entrepreneurial spirit as commercial enterprise though the motives are necessarily different. Even people employed in commercial enterprises are not necessarily motivated by profit.
I commend the National Geographic programme “Rookie Moonshot – budget mission to the moon” if you can find it. It covers the Beresheet lunar probe launched early last year by a non-profit, non-governmental organisation. SpaceIL was started by three Israelis in a pub and successfully landed a probe on the moon, though in more parts than planned. They did it on a budget of $100m and a team of 400 people which is amazingly small compared to NASA and other national programmes.
January 4, 2020
Employment is akin to adoption in the UK.
If you tell a staff member that youâre not satisfied with their lackluster performance and simultaneously award them pay rise as directed by the Tory govt they’re not likely to take you very seriously.
The presence of clock watchers is demotivating for their colleagues and employers alike, and it’s very difficult to dismiss them under present employment law, short of gross misconduct.
January 4, 2020
This pandering of minorities by the government and judiciary is hell for employers. They are giving extremists much power over their employers (ie. Muslims refuse to sell alcohol, and vegans objecting to company policy, etc.), and likewise employers are giving their employees hell unless they toe the ‘liberal’ line and believe men are women and women are men, etc.
The West has gone completely bonkers with hate speech laws and minority appeasement. The UK has previously led the way in personal freedom, but that is now a thing of the past. We are more oppressed than ever.
Please get rid of this anti-freedom ideology that has pervaded every aspect of our society.
January 4, 2020
@ Mark B “The EU stiffles competition through over regulation”.
Worse there are suspicions of regulatory capture by industrialists and tendentious lobbyists such that sub-optimal or even harmful outcomes are dictated, all the while raising barriers to entry in the markets so regulated.
An example is the choice of refrigerant gas now used in vehicle air-conditioning systems. HFO 1234YF must now be used despite being more flammable than that used previously and costing five times as much, with supply in fewer hands. Even the European Parliament is looking into lobbying meetings between interested parties and Evil Empire commissioners.
January 4, 2020
In my opinion, the worst thing that the Government ever did, was to close down those Technical Colleges, where one could go to on courses to learn a skill.
I myself went to ânight schoolâ, as it was then called, on a Shorthand/Typing course, which enabled me to improve my qualifications, and get a good job. The school leaving age was 15 at the time, and the course was taken in my spare time. Many of my peers took exactly the same route, and we did not resent it. Without that extra training, our futures might have been very different.
January 4, 2020
I always thought it terrible that the incredible skills of shorthand and typing were totally wiped out by âtechnologyâ.
And now rather than competent secretarial-run businesses we have a sloppy, couldnât care less e mail culture.
Not to mention misdirected mail of the most sensitive kind. A common occurrence now.
What was it? 100 wpm shorthand and 70 wpm typing…highly skilled, efficient and much valued in the workplace.
Yes..ok I am a Luddite and maybe a humanist too?
January 4, 2020
@Everhopeful; ““[now] we have a sloppy, couldnât care less e mail culture.”
I guess the age of the Telex machine and internal memo passed you by…
The biggest problem today, driving the sloppy office, is not email or DTP but predictive test and spiel chucking software!
January 4, 2020
Spot on Cheshire Girl. Not everyone needs to go to university to get on in life.. I know plenty of people who either didn’t go to college or went to night school that have done extremely well for themselves. A bit of common sense and hard work goes a long way.
January 4, 2020
Both my parents did too. What on earth is the point of getting into ÂŁ50K of debt plus ÂŁ3K of interest PA (and loss of three years salary) for a worthless degree. Probably about 75% of degrees are fairly worthless. Many going to university (perhaps about half) have A levels of lower than 2 Cs!
January 4, 2020
I’m sure the brighter folk can work this out. All of them should be taught cashflow in the 6th form, including the effects of compound interest to frighten them into being 100% certain that going to University is right for them.
Not sure what my 1970s self would do these days. Perhaps prioritise paid work over degree work in order to get by without debt? Teaching maybe, and vacation work could bring in ÂŁ12k – ÂŁ15k a year to almost neutralise the debt.
January 4, 2020
SJS
We were taught compound interest and other lifestyle mathematics in the 3rd and 4th year when I was at secondary modern School, did not have to wait until the later.
I was fortunate our Maths teacher was excellent at making maths fun, and above all relevant to real life.
No Calculators then, instead we had Log tables and a slide rule.
Not suggesting we go back to those basics as that would be silly, but mental arithmetic, the reading of maps, topography, scale measurements on drawings, the sensible reading of train, and bus time tables and the like have all proved useful skills when the phone batteries run out, or there is a power cut.
We were taught skills that would help us to gain and cope with work and life !
Saved a fortune shopping by doing simple calculations in my head.
January 4, 2020
Cheshire Girl
Agreed, polytechnic myself as part of an apprenticeship, then continued more studies after.
Many businesses are started from simple self employment, and the use of other self employed people as subcontractors until you have an established customer base and turnover to employ people full time.
Afraid our tax and benefit system is not user friendly or flexible enough for many to test the water of self employment, and Politicians and Parties of all colours seem to think all self employed people are not to be trusted, and thus need to be controlled.
Not pretending to have all of the answers, but signing on and off of benefit is far too complicated, time consuming with lengthy periods of waiting and inaction for many to take the chance or opportunity of working for themselves.
January 4, 2020
The worst thing for self employment is when govt starts regulating ( tax gathering).
Small businesses just can not afford it!
A favourite double glazer refuses to install windows any more…the red tape is too complex and expensive.. so he sticks to repairs. Installation work goes to big companies.
The regular, incredibly expensive courses gas engineers, electricians etc are required to go on make no sense at all.
If govt really cares so much about our safety (!!!) then let it train/refresh/update engineers etc for free. ( It canât even train doctors yet constantly disrupts schools with âtraining daysâ for trained, working teachers @always happy to indoctrinate.)
The truth is that small businesses pose a threat to the large global companies and must be starved out of existence.
And as the EU knows …what better way to do that than with a raft of profit-draining regulations?
I donât actually believe that the powers that be in the uk want small businesses to flourish!
If they do prove it by letting people make sandwiches and go out and sell them!
Lack of regulation in the past didnât put an end to humanity …did it?
No…govt wars just about saw to that!
( Why not regulate things like noisy hot tubs so folk can get a nightâs sleep??)
January 5, 2020
Indeed – but do not give them yet more new ideas to make a nuisance of themselves please.
January 4, 2020
The biggest barrier to entrepreneurship is access to finance – and a lack of social connections.
And this is what is not easily understood by many Tory MPs because it has never been an issue for them.
Mr Rees-Mogg is my favourite example – because he is a man who is where he is because of where he was born.
Mr Rees-Mogg is a successful businessman. He has a finance business which does very well. But how was he able to set it up?
Well when you have a rich successful father who has Oxbridge connections and is able to also send you to Oxbridge – you know all the people you need to know. Money is not a problem. If you need to borrow ÂŁ50k, ÂŁ250k, ÂŁ1m or more to start a business it is no trouble at all. The money is there.
If you are born on an estate in Gateshead to a single alcoholic mother and you go to the rundown local comprehensive school, you are unlikely to ever go to university. You could not risk the debt. You will never have the background or connections you need to borrow even small amounts. ÂŁ50k to start up a business is beyond your reach.
This lack of social mobility and burning unfairness is what we need to tackle to boost entrepreneurship. It is not Mr Ress-Moggâs fault he was born where he was – and good on him for making the most of the easy hand of aces he was dealt. I doubt he would be in the Cabinet and a multi-millionaire businessman if he had been dealt a hand of jokers like many are.
January 4, 2020
Jacob is not very typical of the modern entrepreneur but still operates successful business in one of the most competitive world markets.
Many fail.
Most successful start ups are by young people due to new inventions and new technologies and there are many avenues of start up funding outside the main banks.
The answer isn’t a dose of socialism.
January 4, 2020
Well that’s a turn round for you, Andy! Championing the person “born on an estate in Gateshead to a single alcoholic mother”, instead of contemptuously sneering at him for voting Leave. Have you forgotten your legend?
January 4, 2020
NickC
It’s much more likely that the ‘Gateshead’ person belongs to the nearly 40% of the population who NEVER bother to vote.
January 4, 2020
Well these non voters must be content with the current political situation.
If they were not, then they would rise up, go out and vote.
January 5, 2020
Margaret H, It was 28% who didn’t vote in the Referendum, not “nearly 40%”. And by Andy’s, and your, hypothesis “the âGatesheadâ person” is exactly the type you have persistently sneered at for voting Leave.
January 4, 2020
Mr Mogg loses if he fails to repay his loan just like the person who decides to go to university who fails to repay a loan, that he has a couple of layers before he is entirely broke is no consolation.
I am leased he is successful, his success like everyone else feeds the national prosperity.
It is odd how envy of wealth has been adopted by the pro-EU cause, but neither seem to do much for real prosperity.
January 4, 2020
Yes it is unfair, but then life is unfair. What is fair about getting cancer when very young, having poor eyesight or is fair about some being brilliant at say football, some being super models or very bright when others or not or some winning the lottery. You get what you are given in life and do your best with it. Hard work gets you a long way if you are fairly sensible with it.
Mogg is however quite bright and would surely have made it to a fairly top university anyway. There are some advantages in business in understanding how poorer people think and cope. You will after all probably be employing some of them and selling to them.
January 4, 2020
Andy,
One of those unusual days I agree with you w.r.t. a major problem (unfair endownments, social mobility, no time to plan when struggling to survive). We would no doubt have different views on the cure, but to deny these problems exist or bat them to one side as many do is a mistake.
January 4, 2020
politics of envy again!
January 5, 2020
Andy, I agree about social contacts and not knowing how to get finance when you first start out. However, when you say a child of a single parent in Gateshead with a mother who drinks a lot is unlikely to go to University – why? If theyâre bright they would, we now school them until theyâre 18 eighteen!
I know lots of single parents (many from choice having numerous children with no man officially present) do you? Many are better off with the state as the main parent and donât have to work in an external job, they have calculated carefully, several middle aged women are now studying with full grants, childcare payments, housing benefits paid, theyâre not as thick as you believe they are. One has minimum wage job for 16 hours with all school holidays off work and is training it is a smart way to go but many donât work at all they should get a degree in benefits management.
January 4, 2020
I spent some of Christmas with my son.
My grandson is now in his mid teens and doing several subjects (11 to be exact) none of which inspire him. He is bright and ambitious. I politely asked him what he wanted to be when he finished school. He looked me in the eye and said, “I want to be rich.” In desperation he is now playing a stock market game on his phone 24/7. But he is losing “money” at it he told me.
Sir John, you have hit the nail on the head. Well written! Let us see how Mr Gove’s blob reacts!
January 4, 2020
He’ll likely only get rich doing something he enjoys.
January 4, 2020
HMG should, as a priority, set up two new large technical colleges, one each side of the Pennines in the north, to train a new generation of plumbers, electricians, heating engineers, jobbing builders etc etc, with as you say help to establish small businesses etc.
It was a disgrace that we had to import armies of People from Poland etc because we had so miserably failed to trade our own.
This might show the new northern constituencies that the government intends to invest in the future of their young people
January 4, 2020
@Jiminyjim; They already have them, all over the country, in facilities that used to be called either “Technical” or “Further Education” colleges…
January 4, 2020
Seconded. Swap sillier uni courses where graduates end up as “barristas” with useful stuff like building and plumbing. Pay craftsmen to teach to recognised standards. It’s been obvious for so long now.
January 4, 2020
“The first thing the government should do is to advise schools and Colleges that self employment is a serious career option”
Probably the only serious option, to avoid being undercut by cheap foreign labour.
January 4, 2020
More needs to be done to avoid stifling small enterprises when they become employers.
Chancellors need to ease off on living wage increases. If raised too fast employers are forced to pay the weak and lazy more than they are worth while, as payroll budgets are usually finite, paying their best staff LESS than the employer wishes.
Ideally the four income taxes (PAYE, employees’ NI, Employers’ NI and auto-enrolment) would be consolidated into one.
Thirdly George Osborne’s nasty little stealth tax whereby an employer can no longer recover sick pay via NI rebates should be reversed. All too often a member of staff is paid sick pay for several months then announces he or she will not be returning to the job, leaving the employer having provided a welfare service and relieving the government from doing so.
January 4, 2020
Hear hear to that, on top of which we are compelled to auto enroll employees to a pension scheme even if they don’t want to join it, which means they then have to opt out after being opted in against their will. This nonsense has to be repeated every three years.
The govt can’t run a sensible pension system so they design another stupid system and force employers to deal with it.
The govts constant meddling and raiding of pensions is the reason that people distrust them.
January 4, 2020
If the Government seriously wanted to run a proper occupational pension scheme then it could, just as those in France and in Germany etc.
But it doesn’t.
You voted for this mess.
January 4, 2020
Labour didn’t alter the State pension Martin.
January 5, 2020
We haven’t had a Labour government for ten years.
And I was writing about occupational pensions, as are nationally organised in France and in Germany.
January 5, 2020
Yes I know that.
But in 15 years of Blair and Brown nothing was done.
In fact Brown did a lot to ruin the growth of occupational pensions.
Nationalisation of occupational pensions would be a very retrograde step.
January 4, 2020
@MiC
Do you think Corbyn would do a better job?
He couldn’t run a whelk stall.
January 5, 2020
Remember which party gave us PFI, pension raids and the new GP contract?
January 5, 2020
Martin, The French mandatory occupational pension typically provides only around one half of the income that the French state pension does. That is clearly not a “proper” occupational pension. Try again.
January 5, 2020
Have you looked at the German scheme?
And compared the French state pension with the UK’s?
Read ’em and weep.
January 4, 2020
You’ll need root and branch reform of the education, tax and employment regulatory systems.
Questions –
Why should a Uni Prof be paid ÂŁ100K p.a. to educate humanities students while a master builder or plumber doesn’t get a bean to support him teaching a new employee?
Why cane new businesses with Corporation tax on profits which go directly into working capital, encourage them to borrow at usurious rates?
Why the silly employment laws which, in a new company with a couple of employees, leave the poor founder struggling with mat/paternity pay, GDPR for possible data requests, sub-contractor tax issues, VAT issues including EU sales returns, NEST. All stuff that didn’t exist in this form when Thatcher was there.
Indeed, why business rates, which cane the new business proportionate to space i.e. proportionate to employee numbers and capital equipment.
The Irish have a HPSU scheme for high potential start ups.
Without reform, you might achieve large numbers of 1 man bands but they’ll never grow.
January 4, 2020
What needs to happen with GDPR is that it should be scrapped, the department and civil servants who implemented from the EU identified by Dominic Cummings and fired as well as the the Information Commissioner. Civil servants need to be trained like dogs to understand that they are there to serve the public, not tie them up in unnecessary and costly red tape as well as scaring them witless and that also applies to politicians.
“What is the higher maximum?
The higher maximum amount, is 20 million Euros (or equivalent in sterling) or 4% of the total annual worldwide turnover in the preceding financial year, whichever is higher.
In practice, the higher maximum amount can apply to any failure to comply with any of the data protection principles, any rights an individual may have under Part 3 or in relation to any transfers of data to third countries.
What is the standard maximum?
If there is an infringement of other provisions, such as administrative requirements of the legislation, the standard maximum amount will apply, which is 10 million Euros (or equivalent in sterling) or 2% of the total annual worldwide turnover in the preceding financial year, whichever is higher.”
How did that become to be enacted to apply to small businesses and voluntary organisations operating on shoestrings?
January 4, 2020
You are thinking along the right lines, self employment could be a big factor in our post Brexit strategy. Self employment leads to employment in many cases for many other people.
As in the USA we should lighten and remove the stigma of failure. Many factors can play in failure, not necessarily the ability of those it inflicts. Policy switches by government can play a big part.
I am too far out of the loop to talk about IR35, but if it is an impediment to self employment, deal with it. Not only should you consider raising the VAT threshold in terms of turnover but visit two other aspects of it. A level of 21% is far too high, bring it down to 10% as a maximum. Secondly evolve a sliding rate entry into its payment lets say in 5% steps. For suggestion and an example, make the threshold ÂŁ500,000 of turnover and the rate 5%, increasing to a 10% maximum at ÂŁ1,000,000 turnover. That is in effect a much higher rate of commission for government than would be paid to any commercial organisation providing a service, apart of course from banks which also need to be dealt with.
January 4, 2020
Quote : ” …. rather than seeking the comfort of a cosy job with a large corporation or state actor …”.
Ouch! Having worked with a large corporation, and with any actors too đ , I am intrigued by your comment, because I neither sought nor found ‘comfort’ and my work could never be described as ‘a cosy job’. Bloody hard work is my experience.
The same cannot be said for some of the local businesses – roofing companies, plumbers, electricians, property maintenance people – who put more effort into ripping off than providing a decent service.
January 4, 2020
any actors = many actors
January 4, 2020
Indeed working for “the man” can be tough, so why not start up yourself if you’re being taken advantage of?
Roofing by the way, isn’t easy. Whether builders should work to accredited standards, yes, and a whole different discussion.
January 4, 2020
I don’t think I said I was being taken advantage of (I’m not), or that roofing is easy. There’s nothing wrong with hard work and I’ve never wanted a cosy comfy job. Hard work keeps your heart beating. You’re right – it’s all about standards. You can’t be a ‘good’ roofer or plumber without working to a high standard. But it’s easy to be a lousy roofer or lousy anything if you don’t work to a standard worthy of the name.
January 4, 2020
The US is not comparing like with like. They are far less risk averse and do not have the safety net of the welfare state. No one in their right mind would start a small business having to deal with so much bureaucracy. Maternity, health and safety, equality and diversity, employment law, environmental law/waste disposal. All chains round the neck of the owner/manager who also has to to make/market/deliver etc whilst dealing with the finance.
If you want to make a difference ask a few of your small businesses to retain the paper HMG spews out, requests for information, returns etc and then ask the question âis this really necessary?â
Finally if you can create a truly entrepreneurial climate, managing a business is far more than just âcreating and selling the widgetâ indeed this is only what the owner manager us skilled at. I have worked with 100s of small businesses and the frightening thread is how little most of them knew when they started up especially around finance, profitability, cash flow management etc leading them to the unnecessary expense of using accountants.
Running a small business/entrepreneurship should be part of the school curriculum and HMG should provide a properly funded business support service, not the âlick of paintâ enterprise agency support outsourced to the Banks as cheaply as possible.
In business you have to invest to survive. Sadly this isnât true with your government and when they do announce an initiative it is inevitably a âheadline numberâ but the reality is that underneath it requires vast amounts of âuselessâ interventions from providers who win the contracts on a âbest valueâ basis that turn out to be undeliverable in terms of both volumes and at the price.
We then get, as with Apprenticeships, announcements about how successful the programmes have been, because of numbers, but never a measurement of economic impact, so fooling no one except, I suspect the Minister who will have no/little knowledge of their brief whatsoever.
January 4, 2020
Indeed perhaps offer some ÂŁ50K loans for some people with good plans and suitable ability to start a business rather than going to university. It would be a better investment in many cases.
I used the business allowance scheme of ÂŁ40p per week for a year when I first become self employed – it was a great help at the time.
January 4, 2020
Loans or equity against collatoral in preference shares or assets – exactly what the Irish already do.
January 4, 2020
Yes re the Business Allowance scheme. Always difficult to judge the âworthâ of a start up hence the difficulty in getting start up/seed funding. Again a major difference from the US where they are more prepared at a personal level to have a punt.
I guess back to the welfare state safety net again.
January 4, 2020
âEncouraging entrepreneurshipâ is essentially the complete opposite of what governments do. They are in the business or regulating them, taxing them, ordering them about, blaming them, trying to make them act as charities for employees, telling them how much they have to pay people, whom they can recruit (and how they have to do it), whom they can dismiss, how they must do it and what compensation they must pay.
January 4, 2020
In the USA when someone tries but fails in business it seems to be generally regarded as an education, here in the UK all to often the person is made to feel a failure, and not just by investors and customers who have taken a financial hit due to the collapse.
We need to revisit our entire secondary school and college education system, not the time children and our youth spend in formal education but when, what and how they learn. The current system has been unfit for purpose for getting on for 50 years, not all the fault of Mrs Thatcher or her later govt either, the only problem with the Grammar/Secondary Modern System was the often inaccessible pathway to switch from one to the other post age 11.
The VAT system needs a total rethink post Brexit, not just the registration threshold raised, many sole traders are at an instant disadvantage by having to pay the full rate of VAT on their business purchases – yes I know there are income tax allowances but a small or start-up business might never reach the threshold and even if they do any pay-back is retrospective. VAT should not be payable on any (officially registered business) making a B2B purchase.
As for UBR exemption, did you mean smaller units or simply based on how long someone has been trading, if the latter expect a lot of small/sole trader business failures once UBR kicks in…
January 4, 2020
You are mistaken , there is nothing cosy about the state sector i.e NHS , it’s every wo/man for themselves, high paid salaries are broken down into working hours whilst all fight for those hours. There was a structure to the NHS pre 1995 which was rapidly broken down , standards fell, ethical standards were put on the back burner but were talked about and never implemented honestly, whilst talent was negated and money considerations were put at the forefront ironically paying large salaries to management who hadn’t a clue about how the NHS worked and the expertise of those training gradually about the needs of the country.
I also, having been married to an Insurance Broker and had a directorship of an Insurance Brokerage and know how difficult this is, especially when political party’s think that businesses should be brought down by intruders and money taken out for the greater good of employment for all (which doesn’t happen)
Due to overcrowding and those not willing to start at the bottom and build up expertise and credibility gradually, working life has been ruined . The structure has disappeared and thankfully those who have seen all, from many perspectives all over the years, can keep things going. There is hope in the NHS as many over the last few years are beginning to think about attitudes , outcomes and are developing a sense of loyalty to those who they serve.
January 4, 2020
Incidentally, it seems that Cummings is really seeking people with no axe to grind in the public sector. The problem with 21 year old weirdos is that they won’t have the experience on the ground in the frustrations of these things and the obvious solutions, so a lot of complicated solutions could spill out which will make matters worse.
Degrees in quantum mechanics have their place but a couple hours going through stuff like this with people who have been there coupled by somebody with the guts and political clout to make the obvious moves are all that is needed in many areas.
Questions like “Why do employers have to concern themselves with employees’ pensions any more than with employees’ weekly food shop?” are easy to ask and can be answered easily with the right amount of guts and political clout.
January 4, 2020
My landlords society informed me that Boris has decided that after the consultation, following which the housing minister was minded to keep Section 21 of the housing act, Boris and the new socialist Conservative Party is going to abolish it. This means that the large number of small entrepreneurs, who bought properties to improve and let, will not be able to get their property back if they need to unless the tenant id anti social or does not pay the rent. The former will be almost impossible to prove and the latter unlikely.
As my plan was to move into my second property and sell the one that I have lived in for 15 years and pay s reduced CGT, I will now have to give my tenants notice and live on a much reduced income, but paying less income tax. So much for supporting entrepreneurs.
Vote Tory get Labour.
January 4, 2020
Why should your business pay less tax then other businesses?
It seems to me too much low cost housing gets brought up and then monetized by the well off, people who actually own their houses tend to look after them better.
January 5, 2020
This Conservative government and under May has acted against smaller landlords by taxing unreal profit and unreal capital gains, unlike other businesses. They believe that big businesses should be running the private rental sector and have supported them. This is despite surveys showing that tenants prefer to rent from smaller landlords and that the service provided is better.
In my case, two units were built and two were slums which were renovated and insulated. The tenants were people who wished to rent for a limited time or they had always rented. The sale of small landlord’s property will reduce choice and put up rents.
January 4, 2020
A pertinent article and highly relevant one in a nation whose various governments since 1997 and indeed their parasitic client state actors have encouraged a ‘collectivist’ culture that provides the leftist State with a reason to expropriate our income to finance higher political spending to prop up their left leaning political structures and expand political party vested interests.
Johnson must reform Labour’s parasitic client state and then use the proceeds from this reform to encourage and finance a culture of business, entrepreneurialism, taking ideas and turning them into the real and into sales and profits.
Promote a culture of self-reliance away from the political state. Promote ideas of individualism, control of personal destiny, a rejection of Statist authority, the promotion of the belief that anyone can create a company like Apple or Microsoft or Amazon if only they had the mindset, confidence, belief, ambition, determination and will. Labour despise all of what I have just wrote
Labour want to promote poverty, actual poverty and if they can’t create actual poverty, they’ll invent a narrative of poverty to promote victimhood. Victims are easily manipulated and easily triggered when a general election comes around. Labour fail in this sinister process when confronted by people who are successful, independent and confident.
The Tory party (those who run the party not decent MPs like SJR etal) since 1991 have betrayed this culture of self-reliance, personal responsibility and the rejection of State dependency.
It is surely time to smash all the ideas and political structures set up to promote Labour’s party interests, their pathetic victimhood culture and their politics of emotional and psychological manipulation
January 4, 2020
Anyone starting a company, good at what they do, all of a sudden has to become competent in tax law, including bizarre VAT if the company becomes big enough. If the business is successful, and the owner starts employing people, they also have to become competent in employment law and health and safety legislation.
Here’s an idea, for a proportion of their profits, the small business owner can offload their tax, employment and health and safety law obligations to the government. Then, if HMRC has a problem with the VAT return, an employee turns out to be difficult or a grievance comes along through an inadequate risk assessment, a government department has to deal with it.
As the business grows, the owner then has to assume responsibility, having been given a chance to gain competence.
January 4, 2020
Indeed the government think employers should have to adopt employees for life rather than merely employ them even if they are useless at the job. This kills productivity & job creation and is only of advantage to poor or lazy employees. Easy hire and fire is the way to create more jobs and more job availability is the best protection for employees too.
Not more workers rights and parasitic jobs for lawyers, HR companies and the likes.
January 4, 2020
Thank you Sir John. A lot of small shops are already business rate free. The Chancellor has cornered them by promising their employees a massive increase and needs to ensure that the small businesses successful enough or dependent on employees are able to meet that generosity by doubling the VAT threshold and reducing other taxes, like 20% VAT on electricity.
January 4, 2020
Perhaps we should encourage the youth of today to take on some sort of work experience during the weekends or during school holidays.
In years gone by it used to be paper rounds, serving in shops, helping the milkman, etc etc,, aware the workplace is changing and perhaps some of these past tasks are now lost, but other opportunities arise.
My daughter used to work in the local stables in exchange for rides and tuition, then eventually moved on to exercising and riding horses at a local stud farm in her spare time.
Working in the local shop or completing baby sitting duties were also common duties undertaken.
January 4, 2020
They still are. We have a teenage girl who baby sits for us.
There is a 15 year old who works weekends in our local cinema.
The youth of today are an impressive bunch.
They largely spurn alcohol and drugs. They care about the planet. Many make sensible lifestyle choices – like vegetarianism or, increasingly, veganism.
They are a shining example to the rest of us. Particularly the embittered baby boomer generation which has contributed little of worth.
January 4, 2020
Andy – – well I never! Teenagers doing babysitting, Saturday jobs, newspaper rounds, helping milkmen -whatever next…..must be a first.
CONGRATULATIONS to the youth of today – they put us all to shame.
You must have had a very lonely privileged youth not to have come across this before.
January 4, 2020
There are many really excellent young people today.
But I don’t think there were many less excellent young people in previous years.
But I realise you have your prejudices Andy.
January 4, 2020
Spot on, Mr Jutson. Some teenagers in my own family have found themselves part-time jobs, and are learning the value of earning and saving money rather than just holding out their hands to their parents when they want a new ”toy”.
Perhaps if more students weren’t too precious to work in their holidays, we might not need so much imported labour for seasonal work.
January 4, 2020
The government should reverse the terrible changes to the taxation of dividends. There’s no point in running a business and being successful if you cannot extract and enjoy the results of your risk and effort at a reasonable tax cost.
January 4, 2020
3 part policy that will encourage small business.
1. Cut regulation.
2. Cut tax.
3. Stay out of the way.
In fact this is a good policy in every situation.
January 4, 2020
Exactly
January 4, 2020
I agree with paragraph 4, and indeed all policies that help self-employment (for the human capital intensive and low/zero scale economy businesses) – the hassles of self-employment often being the main barrier to start for the one person business. Nonethless, innovative entrepreneurship that grows to medium size businesses or more, mostly occurs within educated, multi-skilled, multi-business dense cities with good internal public transport, law and order, and culture (so that the successful do not move out), with regional banks at one end of funding and angels at the other (and firm/university contracts that don ‘t unduly limit the side gig). The UK will need to get Birmingham and Manchester to scale (with the appropriate infrastructure) so that there is more than one city driving UK medium to longer term growth.
January 4, 2020
What a laugh, Sir Pierre Poujade, about 70 years late. Good luck, from what I see every day, you’ve got the perfect audience.
January 4, 2020
Well, honestly, Hefner, what do you expect when you have a brain the size of a planet, and all the rest of us on here are knuckle-dragging, thick, xenophobic, Leave voters?
January 4, 2020
If you say so, who am I to contradict you?
January 4, 2020
Was that supposed to make sense, Mr/Ms Hefner?
January 5, 2020
@L Jones; It does if/once you know who @Hefner was referencing!
I admit though, I had to look it up…
January 4, 2020
The compliance burden is onerous and discouraging, not least since many are indeed obliged “… to get help and advice on how to comply with VAT”.
Replacement of that Evil Empire inspired tax system ought to be an early priority, with administrative ease informing new arrangements.
January 4, 2020
Not just VAT but all taxes are absurdly complex and time wasting. You can easily have to read guidance for hours on just one point on the tax form before you are sure. Tax official often haven’t got a clue either (if you can get through to one). Even stamp duty is now over complex and excessive (even my solicitor got it wrong and I had to reclaim some as the property was counted as two houses not one) as is the new inheritance tax botch that Hammond created to pretend he was not ratting on the IHT ÂŁ1 million threshold promise. No one was fooled ratters Osborne & Hammond.
We have the highest taxes for nearly 50 years and still we get second rate, dire and declining public service. Many in the state sector not only do no good they just inconvenience, tax and often do positive net harm.
January 4, 2020
Each successive Chancellor talks about tax simplification and then proceeds to make it even more complicated.
Many of the taxes we pay are little more than job creation schemes for tax lawyers and financial advisers. They’re a drag on the economy.
January 4, 2020
Why on earth do we have to have NI employers, NI employees and income tax all with different rules – they are all income taxes after all at a total rate of up to the absurd level of circa 63%? Plus student loans, maintenance deductions and the likes
It forces people to use specialist companies to administer it all and that is yet another tax on top in compliance costs and time.
January 4, 2020
Hear, hear to revisiting IR35. As I have said before, the self-employed people number 4.93 million (15% of the population), contribute ÂŁ305bn to the UK economy and bring much-needed flexibility, skills and innovation to the public and private sectors. They are the lifeblood of the UK economy but IR35 will scupper all that. Prominent tax and business groups involved in consultations have all urged the government to at the very least delay its implementation set for April of this year. The clock is ticking.
January 4, 2020
Indeed.
January 4, 2020
How perverse it is to see a Tory government throwing money at Labour’s client state apparatus while attacking those who pay for this appalling waste. It is utterly offensive to see this act of political betrayal but more importantly this immoral use of scarce resources
John. Why are the self-employed paying to prop up the Labour party and their vested interest? Is your party too gutless to confront Labour’s vested interest that is the public sector?
Reforming Labour’s client state will involve conflict and strikes so Johnson avoids reform. Targeting the self-employed involves no political risk at all. This reflects how unprincipled the Tory party’s become that they should choose the easy route rather than the right and common sense route
January 4, 2020
Universal Credit! The biggest block to progressing out of the poverty pit. We need to support anyone wishing to go with their aspirations, hopes and ideas. This includes being prepared to accept failures and give adequate safety nets as over 90% of start ups still fail within 2 years. Contractors and the IR35 issues are a relatively new beast and will be a core part of our global growth, and at the moment, we have a big weakness sitting there.
January 4, 2020
I see the illegals setting off the Channel as entrepreneurs. Commit a crime. Get ferried here. Tell lies to stay here. Sit back and live off the taxes of those who work, Enjoy a rise in living standards from the place you came from. Housed, healthcare, free money, commit crime to get more money, and kids educated – -contribution to the country – nothing positive. As Chris Rea song title sums it up – – “We’re on the Road to Hell”.
January 4, 2020
bign – – everything is coming up roses..
January 4, 2020
Those in Parliament of all complexions, have a mind set of interference.
An irrational need to offer hand-outs, because hand-outs elsewhere are distorting other hand outs and those hand outs are slowing the natural flow.
It might start out as a well meaning idea, but always finishes up as being cumbersome and overbearing on the majority.
A lot less government, then reduce it more would move things along quicker.
Not forgetting Government has better things to do now, they have to act and play their part on effectively the World Stage. The HoC is no longer a local state administrator in the EU.
January 4, 2020
VAT as with Business Rates, Corporation Tax are taxes that no longer have a place in a modern cross border multi-Nation World.
At a stage not to far back ‘Steve Wozniak’ with his vast resources was able to demonstrate that a level playing field sales tax that was equal for everyone produced more revenue. I cant remember the actual amount but it was something absurd along the lines of all enterprises paying a 1.5% sales tax produced more treasury revenue than all the other taxes combined.
The point being everyone one was equal and everyone contributed at the same rate. No tax reductions for this, some more for that, a grant for that and so on.
Our high streets as an example have been paying business rates on the amount of shop frontage to the street. It doesn’t relate to turnover or how much is built out back. So ability to pay and revenue are not in the equation – that’s nuts.
Just treat everyone as equals.
January 4, 2020
Our Governments still live in the dark-ages, and demonstrate a mentality to match.
Why do we give grants for anything, they just distort the ‘Market Place’
Extreme example, after WW11 the US provided funds under the Marshall Plan to Europe. Germany used theirs to set up a bank, that charged interest on loans – so that bank grew and the German economy grew. As is tradition, the UK Labour Government just blewit without regards to the future, building a future – and the UK Taxpayer still had to repay the US.
Instead of grants for anything, any handout of taxpayer money should be an investment, and that investment should be in a defined way that shows a return. So that return can then be invested in the next project. Grants should be self perpetuating, self-funding, without the need of Government to raid the taxpayers wallets.
The Taxpayer is wiser with their own money, far wiser than any UK Government has ever been.
January 4, 2020
How would anyone who has spent their life in a cosy corporate sinecure or the State know anything about anything eh?
So what has we got today? I see, the good olâ USA, where any Joe can start fast food chain and end up a billionaire. Not true. In fact, a US child born in the bottom quintile is more likely to stay there than in the UK or France or Sweden and less likely to make into the top quintile. After tax US income is high but the US has just about the worst most expensive health service in the world and US business is hamstrung by staggering PI Premiums law suits and its attendant red tape . Most of the worldâs richest countries are European and they get schoolz n ozpitalz that work and a much better chance to get somewhere.
Btw those start up figures are rubbish, every tiresome internet vendor of some Chinese tat think s they run a business. Itâs a hobby usually and thatâs before Bona Fide Subbies , Taxi Drivers hairdressers ..is that the shining future of Brexit Britain .. ha ha ha ( bitter ) ha .
We know what the Conservative Party thinks of real business
January 4, 2020
You old cynic MN.
January 4, 2020
Glad to see Sir John keen on this VIP subject after it being treated as a career for spivs and Del Boy type jokes for decades in the UK.
I would encourage more practical training courses be funded to allow this to occur driven by experienced professionals who have proven track records.
It was interesting to see Dominic Cummins blogs hiring odd-ball types for helping out future government to deal with all manner of problems that need solving.
Alan Turing was the last such genius who rescued Britain but it has taken us 80 years to learn this lesson. Better late than never.
And when you think about the irony of Labour helping minorities the hard left are 100 years o
out of date for new ideas.
January 4, 2020
ukretired123,
Although Cummings general intent was reasonable his misplaced ageism is not in the least helpful. Even the great Turing would have been too old for Cummings’s 21 year old requirement. There are plenty of older weirdos and odd-ball types out there.
January 4, 2020
If you want to get someone without baggage and new ways of thinking of is not unreasonable to ask if there are any child prodigies out there.
I agree I have met some very clever older people but they would be pre-conditioned which detracts from blue-sky new whacky thinking ideas and they would pre-filter out thinking on the edge of tech and intersection of unrelated disciplines.
I am sure older applicants who can convince otherwise would make their case heard too.
January 4, 2020
You do not mention the role of apprenticeships and firms employing inexperienced youngsters.
Lots of businesses cannot be bothered with this. The government should try to reverse that.
January 4, 2020
‘The government needs to revisit IR35.’ Yes, I’d agree with that. Too much money is being syphoned-off by ‘umbrella companies’ and accountants. Perhaps the government could look to streamline things.
January 4, 2020
IR35 needs to be revisited true but only for the genuinely self employed not for those who through either their own or their employer’s choosing opt for the tax advantages of earning through a limited company while being essentially employed.
A simple threshold of earnings from a single source (say 90%) would make this a simple calculation for all parties.
January 4, 2020
Here one element that you pick up on is that not everyone who is bright needs to go to university.
I did and have a career is chip design, but it was the only way to get into the industry and I was not particularly successful academically.
Fortunately my ex-boss did not go to university and instead set the company up and works in it as a chip designer. Here the message here is we need to stop lionizing degrees and encourage and support people to just do things.
January 4, 2020
It is rare for someone to do well at University and be bright at the same time. It is probably at the same ratio as the general population.
That is in all probability why No10 is advertising jobs and saying those with humanities degrees need not apply.
A bit like you my ex-boss, no degree, recently sold the company for 340 million, after starting it with not a penny to his name 30 years ago. My best friend at school, no degree, made VP at a major US Bank by the time he was 30. The illustrations could go on for ever, and name drop like mad.
If degrees were so good, just why doesn’t industry pay the students fees off just to get news recruits on board – as is practice elsewhere. Could it be for the most part industry doesn’t equate that sort of value to them
January 4, 2020
The Off Payroll Rules (IR35) roll out may well result in me closing my company. Clients simply do not understand this complex employment status test and donât wish to take the risk of engaging contractors on an outside IR35 basis. Blanket inside IR35 determinations are common place forcing contractors on to PAYE terms (including the employerâs NI as clients cannot afford the increased costs of 14.3%) without the requisite employment rights attached. This also removes the potential for claiming travel and accommodation as tax deductible business expenses making long distance contracts almost non viable. In short this measure will cause severe harm to the flexible workforce. I hope the promised review is carried out independent of HMRC and the Treasury as this will reveal the damaging effects of this policy if implemented. Please pause the roll out and carry out an independent review.
January 7, 2020
The IR35 roll out in the Public Sector showed that end clients were more likely to assume an IT contractor to be inside IR35 rather than outside.
Many contractors subsequently chose not to work in the Public Sector. Daily rates then had to rise to a level which would leave the contractors with the same actual rate as they had before being included inside IR35.
When these same changes are rolled out to the Private Sector, the same result is bound to be produced.
Over a period of time, the increased costs of using a UK based contractor will be compared with the lower costs of off-shoring, and more IT work will be outsourced to other countries. This will benefit the growth of IT services in those countries, and will be to the detriment of the growth of IT services in the UK.
So the ultimate result of the iR35 legislation will be to ensure that less IT work is done in the UK. That is called an own goal.
January 4, 2020
The last thing a post Brexit UK needs is more, low wage, low productivity self employment that will inevitably consist of 99.9% NON-entrepreneurs. While self employment percentages are going down, on average, in OECD countries, it is going up in the UK thanks to its tax system.
A read of https://www.resolutionfoundation.org/app/uploads/2017/02/Self-employment-presentation.pdf shows how the UK tax system; particularly employer NI payments (see IR35) favours the over fifties self incorporating not the youngsters. The latter, on exiting corporate organizations that want to replace them with younger and cheaper employees they can kick around more easily.
Remember, post Brexit the UK’s so called, democracy, will still be the government of the 99%, by the 1%, for the 1%.
January 4, 2020
BTW. I have just been reminded from another site that the UK has the highest VAT threshold on the planet; and, a somewhat narrow VAT tax base. Hence, the UK scores badly on the International Tax Competitiveness Index 2019 for consumption tax yields.
For those that want to do away with VAT, be aware that you will consequently add ÂŁ155 billion a year to the budget deficit.
Replacing VAT with a final consumer Sales Tax would effectively reduce the previous VAT threshold to zero Pounds. An excellent idea. All the government has to do then is to introduce a law that makes it illegal to pay goods and services providers, registered for Sales Tax, with cash. Now that’s what I call “taking back control”. đ
January 4, 2020
Replacing VAT with a sales tax works well in other countries like USA.
Much more simple to administer.
Usually at a single figure rate on the final purchase price.
You would only add ÂŁ155 billion to the deficit if you didn’t replace VAT with another tax.
You lefties really hate self employed people.
They represent freedom of the individual away from state control or control by employers.
It isn’t your business acorn, how productive or how high earning self employed people are.
It us up to the people involved.
If they are happy with the way they work and happy with what they earn then what’s it to do with you.
January 5, 2020
@Edward2; “You would only add ÂŁ155 billion to the deficit if you didnât replace VAT with another tax.”
Only if HMG carried on spending that ÂŁ155 billion.
Some on the right talk of spending/tax cuts but when the effects of those cuts would start arriving on their own doorsteps they bulk…
January 5, 2020
Dear Mr Redwood,
Thank you for your efforts to raise awareness of the damage that the extension of IR35 to the private sector will do.
Associated with this is the Loan Charge which I am hoping you will also champion the total removal of its retrospective nature.
The recent changes made to the Loan Charge following the report from Sir Amyas Morse are of course welcomed, however, there remains significant injustices with this legislation and I along with thousands of others are still wholly impacted by it.
I wound up my limited company in 2009 when I started a new job (employed, PAYE). I returned to contracting during 2010 but didnât want to have to set up a new company, bank account, accountant, VAT registration etc so looked for an alternative, of which there were countless companies all offering very similar services.
The company I chose promoted EBTs in 2010, however, they changed this to a partnership arrangement from 2011 (with hindsight I presume this was due to the change in legislation relating to EBTs although I was oblivious to that at the time). I was advised (as I had been originally) that the partnership scheme was perfectly legal, widely used, registered with HMRC and QC validated etc. I was also told that, as it was not a tax avoidance scheme, it did not have (or need) a DOTAS number. In fact, if there had been a DOTAS number I would not have used the scheme as it would have obviously been tax avoidance!
The company I used also completed my personal tax returns for the period I used them (2010-2015) as I wanted to ensure that all information was correctly reported. In the last few days I have checked with them and have been informed that at the time there was no requirement to declare this on tax returns so the only disclosure was made via the partnership returns â so disclosure was made to HMRC albeit not via my personal tax return.
The changes following Sir Amyasâ report do not change my situation and I still find myself facing a bleak and uncertain future as I do not have the means to repay what I am deemed to now owe. Had I started another limited company in 2010 I would have retained around 70% of earnings as opposed to the 82ish% by using the scheme â a difference of approximately 12%. There is a huge difference between this and the punitive amount being sought. I would also have had discretion as to when I withdrew monies from my limited company, thereby not necessarily having to pay income tax on all earnings in the year earned.
I consider myself to be an intelligent chap, however, looking at this situation I still struggle to see what I would have done differently as, at the time, this was the norm and I (along with thousands of others) were taken in â primarily because it was perfectly legal, just not to HMRCâs taste.
Even now with all the publicity surrounding the loan charge there are still thousands of people joining these schemes so I ask, âwhat chance did any of us have 10 years ago when there was no publicity and HMRC continued to do nothingâ? Surely by having allowed (and continuing to allow) the situation to continue, knowing full well that people would be caught is akin to entrapment, and that really cant be a good situation for HMRC to be in.
I would like to see the full retrospective aspects of the loan charge removed so that legislation becomes solely prospective, and, most importantly, crack down hard and swiftly on the companies still operating and enticing people into such schemes.
January 6, 2020
The British library runs some useful courses for people wanting to start up their own business or grown an existing small business. I attended one at the British library in Kings Cross. I believe they also offer a few of these courses at other locations in England. Their efforts might provide a good base for developing a more widespread entrepreneurial culture, both in schools and for adults with a business idea they think could be turned into a profitable venture.
January 8, 2020
Those last 3 paragraphs are music to my ears. Why did you not get the Chancellor role?!
Perhaps you could remind Mr Javid that he is quoted as saying in 2012 that “the silly ta known as IR35 should be repealed”.
Of course… the perception from small businesses is that people say that to get into power a and then…
Please prove us wrong.
With IR35 about to be rolled out into the private sector on April 6th, many large companies are already saying “no more freelancers”. Others are saying that they will make blanket determinations (which will add up to the same risk-averse outcome).
With that clock ticking, March 11th is already TOO LATE for a Budget to solve this…
People are making those determinations now and changing from self-employment to other work, or to permanent employment – or just sitting it out to see what happens (i.e. economically inactive). Not a great start for the economy of the new Britain.