Small Business Group Calls For Stability In UK Tax System

by Robert Lee, Tax-News.com, London

11 July 2008

The Professional Contractors Group (PCG), which represents the UK’s freelancers, is calling for an independent review of business tax in the UK.

The PCG is urging that once the review is conducted and reforms made, government should guarantee a period of stability in the tax system with none of the constant chopping and changing of recent years.

The PCG’s managing director John Brazier said: “Our new position paper represents a significant contribution to the debate around taxation in the UK. In it, we identify where the problems are, and some of the solutions; but what we really want to see is an independent review deciding the exact shape of new reforms in a genuinely consultative manner.”

The paper recommends that the independent review’s changes should be implemented over the course of the next Westminster parliament, and that for at least the parliament after that there should be no significant changes to the tax system. It proposes that if the Government wishes to increase or reduce the tax yield, it should do so solely by varying rates.

PCG’s paper also outlines how it wants to see freelancers taxed in future. Above all, it calls for self-employed people to continue to be taxed differently from employees: the self-employed receive fees for providing services and are exposed to commercial risk; they must not be taxed in the same way as employees, who receive salaries for providing labour and are not exposed to risk.

PCG also calls for employment status to be defined in statute, the restrictions on sole traders being paid gross by agencies to be removed, and IR35 to be repealed. With this combination, the PCG argued that freelancers will have fair and simple taxation, while the Government’s concerns about “disguised employment” will also be addressed.

John Brazier added: “It is obvious to everyone that the tax system cannot carry on as it is. At PCG we are committed to helping with solving the current problems, and this paper offers a road map for doing so.”

Recommended