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Two steps back: the Taylor Review one year on

1 August 2018

1:34 PM

1 August 2018

1:34 PM

Citizens of nowhere. ‘Keeping pace with the changing world of work’. Two phrases you might just about remember from 2016, when they were strands of the abortive ‘May-ist’ ideology. They must now seem aeons away to the embattled Prime Minister.

If her plan to ‘build a new united Britain’ is draining away faster than you can say Boris Johnson, so too is her commitment to reforming modern work – particularly self-employment.

This month was the one-year anniversary of the Taylor Review of Modern Working Practices. First commissioned back in those heady days when it looked like the May Government would have at least some policies beyond Brexit, its conclusion turned into May’s attempt to relaunch her premiership after the 2017 election debacle.

There was much talk of promoting ‘good work’ and ensuring the interests of the self-employed were ‘properly protected’. But one year on, how much has changed: what has the Government done to promote ‘good work’ and protect the self-employed?

Well, in short: not much. In fact, far from protecting self-employment, it seems determined to take steps in the opposite direction. Without even delving into the recent resignation of the Small Business Minister – or the slow response to the better recommendations in the Taylor Review – the Government now seems set on actively squeezing the self-employed.

So far it has not only reduced the Dividend Allowance from £5,000 to £2,000 – seriously hitting many self-employed people – but also proposed reducing the VAT threshold. If the threshold was lowered from £85,000, it would actively discourage many self-employed people from growing their businesses.

Then there is the biggest matter. For self-employed people, nothing sends a shiver down the spine more than the term ‘IR35’. A tax law specifically for the self-employed, it essentially allows HMRC to tax them as if they were employees – without any of the benefits – if it believes them to be in ‘false self-employment’. A fair way to clamp down on tax evasion and false self-employment, you may say. The only trouble is the sheer complexity of the law means many self-employed people are wrongly caught out by it.

Worse still, from April last year the Government changed how IR35 works in the public sector, shifting the burden for determining IR35 status from self-employed people themselves to public sector bodies. So, instead of wrangling with the complexity of IR35, many just had their contractors and freelancers taxed as employees whether they were in false self-employment or not. As research by IPSE found, it led to walkouts, staff shortages and project delays – and even cancellations – right across the sector.

What many self-employed people find a little puzzling is why a Government supposedly committed to protecting them and promoting ‘good work’ should now be considering extending these changes. But that is one of the lead proposals in its ‘Off-payroll working in the private sector’ consultation. Pushing these changes out to the rest of the self-employed would be a disaster for them and for the broader economy. It wouldn’t just be failing to promote good work; it would be actively pushing a bad economy. The Government must scrap these ill-conceived plans.

There was a time when the Conservative Party, above all others in this country, had a reputation for supporting and building up UK businesses – of all sizes. With uncertainty and the threat of a no-deal still hanging over Britain’s post-Brexit future, let’s hope Mrs May can recall some sliver of the Conservatives’ reputation and ensure our domestic future doesn’t tumble down too. After the summer recess, she must rally her party, recall her commitments and build up Britain’s self-employed businesses again.

Andy Chamberlain is deputy director of policy at IPSE, the Association of Independent Professionals and the Self Employed.

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