author: Sajid Javid; 2009
Even before our new Chancellor became an MP, he wrote an article offering the view that the ‘off payroll’ tax, or IR35 to all in the trade, was a very silly tax and should be removed from the statute books.
He now has a magnificent opportunity to put that view into practice by removing it from inclusion in the Autumn statement. Much to the relief of interims across the country – and all freelancers come to that.
The question is whether he can stem the strong momentum built up by the Treasury and HMRC through all Chancellors since 1999!
Could we ever see the day again when we don’t have to justify ourselves as being in business on our own account?
Can we dare to hope that the way our businesses are taxed is determined by us, the business owners, rather than a client?
Can you imagine what larger companies would say if we decided to determine their tax status? For example, the next time you buy a computer service contract from an OEM, how about telling the supplier that you think they should pay more tax because the Chancellor (through parliament) has given you the right to do this as they may not necessarily be in business on their own account? In fact they may be owned by related third parties (called shareholders) who could receive payments (a benefit) without being involved in the commercial aspects of generating income.
And if they wish to appeal, that’s OK – you are empowered to operate an appeals process on the matter and can let them know the outcome of your review.
Could we even hope that the Chancellor returns to those halcyon days where it was recognised that people in business on their own account took a financial risk, had no employment rights, generated economic value directly and had that recognised in the tax system by being able to receive dividends from their limited company at a lower tax rate than income tax?
Would it be too much to ask that expenses could return to being simple and allowed? Could we even dare to think that the loan charge regulation be removed? If the government doesn’t like the notion of paying loans from an offshore trust or similar, with no expectation of repayment, then make it disallowed. And return to the tax system that didn’t need it to be invented in the first place perhaps?
For the first time in 20 years, we might just have a Chancellor who is truly small business friendly. But will he put our money where his mouth at least was?
What do you think?