IPSE, the Association of Independent Professionals and the Self Employed, today welcomed a report by the Office of Tax Simplification on employment status.
Chris Bryce, IPSE's CEO, supported the review of employment status and was on the consultative committee which informed the report. Speaking on the morning of the publication of the report, he said:
"Employment status is overly complex and urgently needs to be reformed. We welcome the work the OTS has done to bring this issue to light and we hope this report will bring about real clarity for individuals and businesses."
The report, published ahead of the Budget, makes a number of recommendations for the next Government to simplify employment status. These include agreeing a code of principles on employment status; improving HMRC guidance on status; remodelling the Employment Status Indicator tool and giving consideration to developing a statutory employment status test.
"The recommendations are wide ranging and radical. Some, such as improved guidance on status we enthusiastically welcome while others, such as the return to the Employment Status Indicator tool, we will need to give further consideration. Certainly our previous experiences with the ESI tool have not been positive so it will need to be significantly changed if it is to become of real value to independent professionals and the self-employed."
Of particular interest to IPSE is the mention of a 'third way' (such as a freelancer limited company). The OTS believes this idea has potential, but says that more work is needed to show whether it can work in practice.
"Many industry experts have been calling for a freelancer limited company. We are glad the OTS recognise the potential of this idea and we agree that it needs to be developed further. As the only organisation which represents freelancers in the UK, we have been working with IPSE members and senior tax experts at the highest level to address the concerns the OTS raise in their report. We will supply the OTS with a comprehensive proposal at the earliest opportunity and look forward to discussing it with the next government."