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FCSA reacts to Autumn Statement

Responding to the Chancellor’s Autumn Statement Julia Kermode, chief executive of The Freelancer & Contractor Services Association said:

“As the largest representative body in our sector that is committed to setting standards and stamping out unethical practices, FCSA welcomes any measures that tackle disguised remuneration schemes.  Such schemes have become more prevalent, some with particularly complex offshore structures, which entice contractors and self-employed by the high returns offered. It has become increasingly difficult for legitimate businesses to compete with these schemes, so we fully support the Chancellor’s move to tackle them.  Similarly we are pleased with planned penalties for “enablers” of tax avoidance, and hope this will go some way toward preventing further unethical or dubious schemes from evolving.

“However, we are outraged that the 5% tax-free allowance for business expenses will be removed from off-payroll workers in the public sector. The new complexities around IR35 status means that professional contractors and interims will be forced into making deemed payments throughout the year, which in turn means that they will need more accountancy support going forwards to reconcile their financial affairs, and therefore more justification for the 5% allowance.  Once again the hardworking freelancers and contractors who are propping up the UK economy are being penalised.

“On the flat rate VAT scheme, we are not surprised that measures have been introduced by Mr Hammond today.  We have seen an increase in structures being set up to benefit from the flat rate scheme so it was inevitable that action would be taken.  It seems unfair that those operating legitimately will suffer, but in the current economic uncertainty this change represents significant gains to the Exchequer of £195m 2017-18 which cannot be ignored.

“We also welcome the news that the Government is aligning tax and national insurance and demonstrates that it has listened to the office of tax simplification, an independent body that is highly regarded and respected.   Whilst there will be some winners and losers from the change, we welcome the move in terms of the overall simplification that will be delivered. Changing to an annual, cumulative and aggregated (‘ACA’) approach for calculating employee national insurance will be simpler for employers, and OTS research shows, that from the employee perspective, there will be more winners than losers.

“Lastly, we are pleased with the proposal for future Autumn Statements to be abolished in favour of simplifying tax policymaking.  Let’s hope this is borne out in practice with properly considered changes being brought in once annually rather than twice.”