A STRATEGIC review of the entire legislative framework relating to contractors is needed if the Government is to meet its long-term aim of a simplified tax regime, a leading expert declared today.
PRISM chief executive Crawford Temple said securing an extensive review of the whole system was the only way to deliver a level playing field that would stand the test of time.
The trade body chief described a review as presenting a “win-win situation” for the Government which could signal its vision of the future to employers and intermediaries.
“Our tax framework was created in an age when everyone was either employed or self-employed but times have changed. Today’s flexible workers don’t fit the traditional categories of employed and self-employed and there are too many of them to brush them under the carpet. More than 10 per cent of the working population are flexible workers.
“The intricacies of the labour market need to be more fully understood and legislated for as a whole.”
Mr Temple said this would end the “sticking plaster approach” that creates a domino rally of market distortions as firms attempt to give employers and workers what they want while trying to follow rules that were never meant for them.
He spelled out SIX key reasons why a review was necessary and why everyone in government and business should demand one.
PRISM, the employment intermediary trade body, believes a review will result in:
- a simplified tax system that is more easily understood
- the right taxes for the right worker, recognising the different sectors within the market
- a level playing field removing unintended market distortions
- increased tax compliance helping to manage the tax gap
- a clear roadmap for legislation based on government’s stated long-term objectives
- increased compliance throughout the supply chain
Mr Temple added:
“PRISM wants to be forward looking on this issue and help improve compliance, raise standards and create a framework to reflect the 21st Century. As such, we look forward to being able to contribute to a vital review that is long overdue.”
There are currently more than 1.6million contractors in the UK and Mr Temple believes a review would result in more jobs that people want and more investment.
“If a review results in better legislation that nurtures the flexible labour market alongside the more traditional types of working, it’s a win-win situation for the Government.
“If we don’t get a review, we are concerned about the threat to UK plc’s flexible workforce which has delivered real results for business and helped pull the UK economy out of recession.
“The current sticking plaster approach provides little certainty to workers, recruitment companies, suppliers or engagers and creates unintended consequences in the market requiring yet more sticking plasters.
“The overriding principle must surely be that the temporary worker has certainty and clarity over their tax affairs in the same way an employee, the self employed or an entrepreneurial businessman does.”