Contractor tax review 'long overdue'

The government is on course to miss its long-term tax goals unless it launches a review of all legislation affecting the UK’s 1.6million contractors, warns a trade body.

Only with such a review can there be a ‘simplified tax regime’; a ‘level playing field’ for workers and a reduced ‘tax gap’ – three objectives that HMRC has set, says PRISM.

“If we don't get a review, we are concerned about the threat to UK plc's flexible workforce,” said PRISM’s boss Crawford Temple, seeming to refer to April’s expenses clampdown.

“Our tax framework was created in an age when everyone was either employed or self-employed…[and] today's flexible workers don't fit the[se] traditional categories”.

PRISM points out that more than 10 per cent of the UK’s working population are now flexible workers - too many to be ‘brushed under the carpet,’ the body says.

But currently, these workers are subject to the “sticking plaster approach” which Mr Temple believes is unhelpful and needs to be brought to an “end” by the review, which is “ long overdue.”

“[We currently have] a domino rally of market distortions, as firms attempt to give employers and workers what they want while trying to follow rules that were never meant for them,” he added.

“The intricacies of the labour market need to be more fully understood and legislated for as a whole…[and] the overriding principle must surely be that the temporary worker has certainty and clarity over their tax affairs in the same way an employee, the self-employed or an entrepreneurial businessman does.”