MPs opposed to George Osborne’s changes to travel and subsistence relief have attacked the policy in Parliament.
SNP Treasury spokesman Roger Mullin described the the move as an act of “social and economic injustice” during a debate on the Finance Bill.
Mr Mullin was one of 55 Parliamentarians to sign an open letter devised recently by trade body PRISM calling on the Chancellor to launch a strategic review of the entire sector.
PRISM’s chief exec Crawford Temple was asked to brief Mr Mullin ahead of his speech this week in which he made clear the changes would have a dramatic effect on contractors serving rural communities.
Mr Mullin told MPs:
“The truth is that while this Government, through this Finance Bill, are taking feeble measures to tackle tax evasion, at the same time, in an act of social and economic injustice, they are mounting an attack on small individual contractors who serve rural communities, preventing them from having travel expense relief.
“These people are not tax dodgers. They are flexible workers, with both private and public clients, who are essential to many rural communities in Scotland.
“Yet at the same time as these people are attacked, the Government are protecting tax dodgers and millionaire Tory donors by continuing to allow huge loopholes in the system.”
PRISM, the not-for-profit employment intermediary trade association, fought against the changes to T&S with its YES2T&S campaign. This led to its call for a review in the hope ministers might finally give contracting official recognition for the first time as a ‘third way’ of working, distinct from being employed or self-employed.
Contractors employed through employment intermediaries have historically received tax relief on home to work travel expenses because they work at a series of temporary workplaces.
Contractors have no job security and lack the same access to holiday pay, sick pay and pensions as permanent employees.
Mr Mullin was joined in his defence of contractors by House of Lords shadow SNP spokeswoman Kirsty Blackman who highlighted the impact the changes would have on contractors travelling greater distances.
“There is no question that this change will hit rural communities disproportionately.
“I suggest that the Government have not really thought this one through or have not grasped quite how rural some of these communities are.
“For communities such as Shetland in particular, where there is heavy reliance on oil and gas companies, that may have a significant negative impact. Due to the level of expertise and specialisation in oil and gas, many people in the industry are employed as contractors, disproportionately so, and removing the tax allowance that workers can claim when they stay overnight in Shetland on the way to a rig would be a bizarre way to support either the oil and gas industry or small rural communities.”
The SNP have said they plan to table amendments to the Finance Bill to address these concerns.
Ms Blackman added:
“The Chancellor has claimed that he is going to listen and learn. We will test him on that claim.”
Mr Temple insisted the battle to convince the Government a strategic review is in the national interest would continue.
“For the sake of UK competitiveness we need a flexible workforce that can operate on a level playing field and continue to make a huge contribution to the economy.
“Legislation needs to catch up with the way working has evolved in Britain, where its flexible and skilled workforce is one of the key factors that makes the UK attractive to foreign investment.”