Tax reform will boost flexibility, conference hears

Anna Scott

The piece of tax legislation known as IR35 must be simplified in order to recognise the contribution of small businesses and freelancers to the economy and encourage flexible working, the Conservative Party Conference has heard.

Under the legislation, workers who receive payments via an intermediary are taxed at a similar rate as if they were employees. While the IR35 Forum of taxpayer representatives and experts was established after the 2011 Budget to improve the way the legislation is administered, there is a real need to simplify the tax code and expand the work of the forum, a fringe meeting at the conference heard.

Conservative MP Chris Fincher said that the legislation should to be changed in order to get the most out of flexible working, saying that the “tax man doesn’t get flexibility”, and there is a real need to simplify the tax code and expand the work of the IR35 Forum.

Kate Shoesmith, the REC’s head of policy and public affairs, agreed, describing the IR35 as “dreaded” and “a confusing piece of tax legislation for workers, recruitment businesses and the government itself”.

At the same fringe event, Conservative MP Adam Afriyie said there needed to be a fundamental cultural shift in how we approach flexible working, with one in seven people in Britain currently working flexibly, and the prediction that this part of the labour market will grow by £5 billion in the next five years.

This includes recognising the contribution of freelancers to the economy, according to PCG: The Freelancers’ Association.

Responding to the Chancellor of the Exchequer George Osborne’s speech in which he reiterated the increased income tax threshold and the exempting of the smallest firms from paying national insurance, Simon McVicker, director of policy and public affairs, said: “As the very smallest businesses, freelancers need tailored policies which support and enable their continued success. The UK’s growth depends on it considering freelancers contribute £88 billion to the UK economy every year.”