PRISM: Gov's self-employment study bolsters case for strategic review
An independent review of self-employment bolsters the case for a strategic review of the tax system, Crawford Temple, CEO of trade body PRISM, said today.
The in-depth look at the sector by Julie Deane, founder of Cambridge Satchel Company, was commissioned by the Government and published on Sunday.
Temple highlighted a string of findings which support the organisation’s calls for a review of the tax system affecting flexible workers.
Deane’s remit did not allow her to venture into taxation but she revealed it was a topic frequently mentioned by those she heard from.
In her report she wrote, “Taxation was repeatedly raised by all of those interviewed – as an administrative burden, a barrier to growth, and an issue that could benefit from improved simplicity and better advice. Given the scale of concern I recommend that Government looks at this in more detail.”
Temple said the idea of a strategic review would be the right vehicle for a wide-ranging study of how the tax system was currently failing flexible workers.
He added, "Julie Deane has picked up on the complexity of the tax system which does not help anyone, least of all flexible workers including contractors. I hope David Cameron listens to her advice and heeds our call for a Strategic Review.”
PRISM wants a Treasury review led by the Office for Tax Simplification (OTS) in the hope its recommendations finally bring about tax changes that recognise a third type of worker in Britain - the contractor - who does not conform to the traditional labels of ‘employed’ and ‘self-employed’.
There are 4.6m self-employed in the UK. However, there are another 1.6m contractors in Britain who see themselves as self-employed but technically work through employment intermediaries. They are not properly accounted for and PRISM, the employment intermediary trade association, believes this is a growing problem alluded to by the report.
Deane wrote, “The description of ‘self-employed’ applies to a wide variety of individuals and sectors and there is currently no clear understanding of the employment status within many of these groups. The lack of a legal definition of self-employment is causing an issue.”
Deane’s study reported how nearly 60 per cent in the rise in self-employment in the past five years has come from managerial and professional jobs.
Temple expects this trend to be replicated in the contracting sector, meaning more workers in the future subjected to the current status quo.
He said, “What this means is that the number of people in those jobs prone to uncertainty is swelling. This makes it a growing problem that can only be addressed by a strategic review that lets everyone know where they stand.”