The government should overhaul the tax system for UK businesses, and pay particular attention to micro enterprises like freelancers and the self-employed.
Issuing this call in its new policy paper, the Professional Contractors Group said only an independent review should decide the future shape of business tax reforms.
If the review is “genuinely consultative,” its recommendations should be enshrined in law to halt the past “chopping and changing” of tax policy at the government’s whim.
But because tax changes can cause headaches for businesses, particularly smaller ones with fewer resources to respond in time, any ensuing proposals must be delayed.
“The independent review’s changes should be implemented over the course of the next Westminster parliament, and that for at least the parliament after that there should be no significant changes to the tax system.”
Unlike the car tax proposals confirmed yesterday, which apply to drivers who registered their cars since 2001, the PCG added that the reforms must not be retrospective.
The group, which represents freelancers, said that if the government wishes to increase the tax yield, or, for some reason, reduce it, then it should do so “solely by varying rates.”
But it said that because the self-employed face a commercial risk they should continue to be taxed differently to employees.
Employment status should be defined in statute, the restrictions on sole traders being paid in gross by agencies should be removed, and the IR35 legislation should be repealed.
“With this combination, freelancers will have fair and simple taxation, while the government’s concerns about ‘disguised employment’ will also be addressed,” the PCG said.
Its managing director John Brazier reflected: “It is obvious to everyone that the tax system cannot carry on as it is.”
“We are committed to helping with solving the current problems, and this paper offers a road map for doing so.”
Jul 11, 2008
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