Government’s planned clampdown on tax avoidance must not penalise genuine interims, recruiters say

RA Now

The government is to prevent employment intermediaries from disguising employment as self-employment in order to avoid tax, Chancellor George Osborne has announced in the Autumn Statement.

As part of a general clamp down on tax avoidance and aggressive tax planning aimed at raising more than £6.8 billion, the Treasury will also introduce a new power requiring taxpayers using avoidance schemes that have already been defeated in the courts to pay the tax they are trying to avoid upfront.

Describing the measures as the largest to “tackle tax avoidance, tax evasion, fraud and error so far in this Parliament”, Osborne said: “We’re going to tackle the growth of intermediaries disguising employment as false self-employment, depriving workforces of basic employment rights like the minimum wage in a bid to avoid employer national insurance.”

The Recruitment and Employment Confederation welcomed the news, adding that clarity and effective enforcement was needed, but “without penalising genuine interims, contractors and freelancers”, tweeted Tom Hadley, director of policy and professional services.

PCG: The Freelancers’ Association, tweeted that false self-employment should be tackled by the government must “tread very carefully” and genuine freelancers shouldn’t be impacted.

The chancellor also announced that business rates in England and Wales will not apply to the smallest businesses, and increases in the rates will be capped at 2%, rather than linked to RPI inflation.

Employer national insurance contributions for under 21-year-olds on earnings up to £813 per week will also be abolished, Osborne revealed,

Both announcements were welcomed by recruiters. The PCG said that the the removal of business rates for the smallest firms was “fantastic news for micro businesses, and said that scrapping employers’ NICs for those under 20 was a “good measure to boost youth unemployment”.

In the long-anticipated statement, the chancellor also revealed that the state pension age would be increased to age 68 from the mid 2030s.