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Spring Statement: Fewer words, less action, little surprises
by Susie Hughes at 13:13 14/03/18 (Political News)
As is often the case with Government announcements, it is often more significant about what is not said than what is.
And in the case of this slimmed down 'Budget-lite' report, there was more discussion about where consultations might lead in the future.

Some saw the announcement of early stage consultations as careful tax-planning, and welcomed the lack of knee-jerk announcements which have caused controversy in the past.

Others criticised the lack of action.

No mention of IR35 always brings a sign of relief - and led to speculation that the expected consultation and changes to the bring the private sector in line with the controversial public sector rules might have been kicked into the medium, if not long, grass.

But, the spectre of IR35 and changes in the private sector has not gone away for ever.

VAT
Although not mentioned in the scaled-down Chancellor's Statement, the possibility of lowering the threshold for VAT was mooted in the Goverment's call for evidence. But, some groups described the prospect of lowering the VAT threshold as 'a significant blow for the self-employed'.

Although the Government has not pledged to change VAT thresholds, its call for evidence has set faint alarm bells ringing. If the Government were to decide to lower the VAT threshold, freelancer group IPSE, said 'it would be a disaster'.

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IPSE listed its concerns about lowering the threshold. It said it would..
  • Compel small business owners, to choose between raising their prices, which could drive away customers, or absorbing the cost of the VAT rise themselves.
  • Actively discourage many small businesses from growing beyond the threshold.
  • Impose a significant bureaucratic burden on many self-employed people when they already have to expend large amounts of valuable time on the bureaucracy of tax self-assessments.

Training
One positive for the self-employed which did make the final cut of the speech was a consultation on tax-free training for the self-employed. The current training tax system has been called 'unjust' in relation to freelancers and the self-employed as it does not allow them the same relief for training as employees.

The prospect of tax-free training options for the self-employed has been on the campaign list for freelancer group, IPSE, who said it was 'a major victory' and should be welcomed by all.

Late payments
Often the curse of the small business, there was a general welcome for a consultation on ways to clamp down on late payments. Research has shown that freelancers spend approximately 20 days a year chasing invoices for late payments.

Reactions
IPSE - 'Some wins'
Chris Bryce, CEO of freelancer group IPSE’s, said: “There were certainly some wins in the spring statement for the self-employed – not least the very welcome consultation on making training tax-free for the self-employed.

"But the low-key way the Government has released this ‘Call for evidence’ on lowering the VAT threshold is surely not the best way to go about things. If the Government was indeed to lower the threshold, it would create a nightmare scenario for many thousands of our smallest businesses. Slipping this prospect under the radar is just not a positive approach. We hope the Government will be more up-front with the self-employed community in future.

“If this did ultimately lead to a drop in the VAT threshold, it would cause serious cash-flow problems for many self-employed people. They would quickly face the stark choice of either raising their prices – causing them to lose customers – or absorbing the cost themselves, which would do significant damage to their businesses.

"The change would also introduce a sea of red tape for smaller businesses and actively discourage them from expanding. We urge the Chancellor not to consider damaging small businesses and the self-employed with a VAT threshold drop, but instead give them the support and protection they need.”

CIOT - 'No surprises'
Tax professionals at the Chartered Institute of Taxation (CIOT) saw the limited Spring Statement as a significant step towards more considered and more effective tax policy-making.

CIOT's John Cullinane said: “A limited statement, with no fiddly tax changes or ‘rabbits from the hat’, but launching a number of broad early stage consultations, is just what we wanted to see.

“Tax change is one of the greatest causes of complexity, and having two major fiscal events a year encouraged Government to keep fiddling about with the system, while frequently not allowing enough time to consult on planned changes. The Spring Statement indicates that the Chancellor is serious about limiting new tax announcements to just one annual fiscal event – the autumn Budget.

"This should enable officials at HMRC and the Treasury to get off the treadmill of constant change, reducing the strain on the Government’s tax policy resources and freeing up time for better consultation and scrutiny of those proposals that are put forward.

“We welcome the Government’s launch of a number of broad ‘calls for evidence’.

“In the past too many consultations have begun when key decisions have already been made, shutting off potential better options to achieve the same goal. Calls for evidence, like those launched on the VAT threshold and on ‘tackling the plastic problem’, are hopeful early signs that the Government will be doing more early consultation, getting input from business, tax professionals and others to inform the process before a proposal has been drawn up.

“Nobody thinks the tax system is perfect, or that it doesn’t need reform. But we need considered, carefully consulted on, change, enacted with good warning and in line with a coherent and widely understood ongoing strategy. Acting less fitfully, but more effectively, should be the Government’s approach. This limited statement is a good start.”

Qdos - Promises not changes
Tax specialists, Qdos Contractor, gave a cautious welcome but warned that'action speaks louder than words'.

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Seb Maley, Qdos Contractor CEO, said: "On the whole, there were no big surprises in the Chancellor's speech. That said, the self-employed will welcome new pledges to tackle late payment and focus on the tax activity of big businesses. However, these aren't policy changes, these are promises.

"Regarding IR35, no news isn't necessarily good news. We still await the findings from the IR35 consultation, which should shed light on possible plans for reform. The sooner this is made public, the better for each party in the supply chain.

"Late payment is a huge problem for independent workers and small businesses, so any measures introduced to prevent it will be widely welcomed. But as always, actions speak louder than words, and we await the Government's next moves regarding a late payment consultation."

FPB - 'Awaits action'
The Forum of Private Business welcomed the commitment from the Chancellor today to eliminate the scourge of late payments and improving productivity, but awaits the action that will follow.

Ian Cass, Managing Director of the Forum, said: “Late payments are a major concern to many small and micro businesses. That’s why we set up our Hall of Shame. We have previously heard musings from government about dealing with the issue of late payments so we now await real action from the Chancellor.

“He also spoke about championing small businesses, but made no mention of work on any of the things on the Forum’s wish list. Uncertainty on EU nationals, for example, is essential for both employees and employers.”

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Susie Hughes © Shout99 2018

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