OPINION
This article has been updated with additional commentary
On LBC with Nick Ferrari this week, Mel Stride, the “architect” of IR35″ and candidate for Tory Leader, admitted that the legislation isn’t working properly and needs reviewing. He also addressed the loan charge. Dave Chaplin, CEO of ContractorCalculator, shares his views on Stride’s suitability for leading the Conservative Party and his stance on self-employed interests. While Qdos CEO Seb Maley comments on the Chancellor’s plans to target tax avoidance schemes linked to umbrella companies, a sector that has grown since IR35 reforms made direct freelancer engagement more challenging.
“Mel Stride was the architect of IR35 and repeatedly denied the problems it was inflicting on contractors, the firms that hire them and the economy as a whole, despite all the contrary evidence presented to him,” says Chaplin.
Referring to Stride’s LBC interview, Chaplin says, “He has confessed to yet another Conservative coverup – IR35 is not working properly and needs reviewing.”
Chaplin continues, “Moreover, Stride delivered a half-truth on the loan charge using Nick Ferrari as an example of someone who paid a person via a loan in a bid to avoid tax. What Stride failed to say is that Nick’s worker was forced to work through a specific scheme to get the job, and by doing so Nick should have been liable for the unpaid tax and not the worker.
“The loan charge reversed the liability and made the worker liable, and not Nick. Nick, as promoter got off scot-free, whilst the Loan Charge wreaked havoc on the lives of ordinary working people who had been forced into the schemes.
“Mel Stride was famously called the ‘Misleader’ of the House by Paul Lewis on Moneybox some years ago and he continues to mislead to further his own career as we heard on LBC earlier today. Lack of trust was the reason the Tories were ejected in the General Election and Stride is the wrong person to rebuild trust in the Conservative Party.”
Treasury crackdown on tax non-compliance
The Treasury’s public spending audit document stated: “The government is committed to tackling tax non-compliance, including from fraud and tax avoidance, to ensure everyone pays their fair share. The government will increase HMRC’s compliance staff, invest in HMRC’s resources and technology infrastructure, and make legislative changes to tackle tax non-compliance and raise revenue.”
Commenting on the Chancellor’s speech, Qdos CEO, Seb Maley, says, “The Chancellor’s speech has set an ominous tone. The public purse is apparently in worse wear than previously thought. Now you can’t help but think that the scene has been set for tax rises – with the Budget confirmed for 30th October.
“For the self-employed, the first – and maybe most notable detail in the government document – is that more will be done to tackle tax non-compliance. HMRC will be better resourced, more compliance staff will be hired and the tax office’s technology infrastructure will be invested in. Throw in the pledge to make legislative changes to tackle non-compliance and it suggests that HMRC under a Labour government will be ramping up its compliance activity.
Maley says on one on hand, if by legislative changes the government decides to tackle promoters of tax avoidance schemes – like the disguised remuneration schemes that have plagued the umbrella industry – that would be “widely welcomed”.
However, on the other hand, granting HMRC more powers to fight non-compliance could present a threat to many taxpayers – if recent years are anything to go by.
“All too often, we’ve seen innocent freelancers and contractors caught up in long, drawn out and costly tax investigations. While it’s right that everyone pay their fair share, the mistreatment of innocent taxpayers simply has to stop,” says Maley.
