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The Association of Independent Professionals and the Self-Employed (IPSE) has urged the Chancellor to make off-payroll working rules fairer and more effective in the Autumn Budget. The current IR35 rules, which impact freelancers and contractors, are causing significant disruptions for businesses.
An IPSE survey of 1,300 contractors in early 2024 revealed that over half (54%) had walked away from work offers due to disagreements over IR35 determinations. IPSE is calling for a simpler, fairer system and more support for taxpayers facing challenges from HMRC.
IPSE’s Fred Hick said: “For the first time since Spring 2010, a Labour Chancellor will deliver a Budget statement to the House of Commons…we’re hoping the government can spare some positivity for the sector.”
Source: IPSE website
UKHospitality has warned that the hospitality sector faces a £928 million tax bombshell in April if business rates relief ends. Without action from the government, businesses will face quadrupling rates, risking closures, job losses, and the shelving of investment plans.
UKHospitality’s Chief Executive, Kate Nicholls, urged the Chancellor to introduce a new, lower permanent rate for hospitality: “Hospitality businesses are facing a devastating cliff-edge next April…inaction could be fatal.”
Source: UKHospitality website
The Resolution Foundation has suggested that changes to inheritance tax (IHT), capital gains tax (CGT), and national insurance (NI) could generate more than £20 billion annually. The reforms would align tax rates across different income types and increase tax fairness.
According to Adam Corlett, Principal Economist at the Foundation: “Long overdue reforms to IHT, CGT and pension contribution reliefs would fit the bill…making the tax system fairer and more consistent.”
Internet link: Resolution Foundation website
The Low Incomes Tax Reform Group (LITRG) has urged HMRC to act quickly to prevent confusion when new tax reporting rules for online platform sellers come into effect in 2025. The LITRG fears that many online traders may be unaware they need to file tax returns.
Claire Thackaberry, Technical Officer at LITRG, said: “Time is running out for HMRC to defuse this ticking time bomb.”
Source: CIOT website
According to the National Audit Office (NAO), £5.5 billion was lost to tax evasion in 2022/23, with small businesses being the primary offenders. HMRC has been criticised for not having a targeted strategy to address evasion, particularly in high-risk sectors like takeaways and sweet shops.
Gareth Davies, Head of the NAO, commented: “HMRC has so far lacked an effective strategic response…too little emphasis has been placed on widespread methods of evasion.”
The UK’s tax gap estimate surged to a record £39.8 billion in 2022/23, with small businesses contributing to nearly two-thirds of unpaid tax, according to HMRC data. The tax gap, representing the difference between the tax that should be paid and what is actually paid, was 4.8%.
For small businesses, the corporation tax gap rose to £10.9 billion, while the total corporation tax gap was £13.7 billion. John Barnett, Chair of the Chartered Institute of Taxation’s Technical Policy and Oversight Committee, commented:
“Critics of HMRC can point to a record amount – nearly £40 billion – not being collected, but HMRC can legitimately point out that they are bringing in a record share of the expected tax take. That both these things can be true simultaneously tells us more about current tax levels than anything else. These figures show there is plenty of work for HMRC to do in a range of areas to reduce the tax gap. However, we should not lose sight of the fact that their record collecting more than 95% of tax due compares well internationally.”
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Despite having landmark powers since 2017 to impose hefty fines, HMRC has not fined a single enabler of offshore tax evasion in five years, according to data released through a Freedom of Information (FOI) request. The data, released to the Bureau of Investigative Journalism (TBIJ), suggests HMRC is failing to target creators of offshore tax evasion schemes, instead focusing on the clients of such schemes.
Michelle Sloane, a tax disputes partner at law firm RPC, remarked:
“Enablers were and still are a big focus for HMRC. But these figures show their rhetoric on tackling enablers is clearly not being followed through with action.”
An HMRC spokesperson defended their track record:
“We have a strong track record in tackling offshore non-compliance. Since the launch of our No Safe Havens strategy in 2019, we have secured almost £700 million from offshore initiatives.”
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About Accace Adept UK
We are a joint venture between Accace and Adept Advisory, established to pursue a long-term strategy of providing innovative Business Process Outsourcing (BPO) and advisory services to clients in the United Kingdom and South Africa. We joined forces to augment each other’s valuable insight, knowhow and practices, whilst combining our experience in complementary fields of expertise.
About Accace Circle
Accace Adept operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 50 jurisdictions with nearly 2,500 professionals, we support more than 15,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 200,000 pay slips globally.
