In a recent blog I wrote about a decision I made back in the late 1980’s, when I chose to be self-employed. Since then I’ve read a number of articles about self-employment, the IR35 legislation and how contractors are swamped in wave after wave of bureaucracy. Constantly threatened by dreaded IR35 status checks, it seems that the road to self-employed status has become a very complicated one, which is why I decided to write this blog.
IR35 affects all small businesses, self-employed consultants and contractors. To those who are unlucky enough to fail HMRC’s definition of being self-employed it means they could be faced with huge, backdated demands for tax and National Insurance liabilities.Click here for more guidance on how IR35 works.
Why can’t a person who wishes to be self-employed do so without all this unnecessary red tape and the uncertainty that it entails? Should we automatically assume, as seems to be the case, that the majority of these people are tax dodgers and really employees of the company that they supply their services to?
Lets encourage self-employment
According to the Office for National Statistics, 1 in 7 people in employment chose to work for themselves in the UK. That’s a massive 4.5 million people, accounting for over a quarter of employment growth since 2010. Is this something to be discouraged?
If someone chooses to be self-employed, their income will depend upon their ability to find work, to provide a service to the clients’ satisfaction and to get paid for it.
By choosing to be self-employed they are giving up their employment rights, training, career development and the other numerous benefits and protections that go with being a company employee, just as I did all those years ago.
Flexible working can be of benefit
Our economy, the systems that businesses use and our working population are constantly evolving but our governments have been too fixed on the past with their views and opinions about the way that we work. Perhaps it’s time to stop legislating against something we should accept as a positive benefit to our economy and open our minds to these more flexible ways of working. The surge in the number of people working as self-employed consultants or contractors suggests that this is exactly what businesses want and people are responding to this demand.
The approach that’s been taken for decades clearly isn’t working and the tests are outdated.
People are choosing to be self-employed consultants or contractors and companies are happily using these flexible services to meet their fluctuating demands.
Reform is hopefully coming
MP for Morecambe and Lunesdale, David Morris, has been re-appointed as the Governments self-employment ambassador. Mr Morris is reported to have said... "I am delighted to be re-appointed as the Government’s self-employment ambassador. As a self-employed businessman for many years before being elected to Parliament I know only too well how complicated legislation can burden businesses…”
I’m also encouraged by the recently announced independent review of self-employment in the UK by Julie Deane OBE, and I hope that this review finally helps to break down these legislative barriers and encourages this flexible workforce to thrive and grow.
Maybe this time we’ll see a report that focusses on where we want to be with the whole self-employment issue rather than making meaningless comparisons. The traditional, lifetime employment model has changed and it’s time we accepted this.
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John Urpi is CEO at First Recruitment Group