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Labour Business Group backs Labour’s plan to reform IR35
by Susie Hughes at 15:35 11/12/19 (News on IR35)
A left-wing business think-tank has welcomed Labour's plans 'to reform IR35'.
Labour Business, is a business membership group affiliated to, but independent of the Labour Party. Philip Ross, a freelancer, Shout99 contributor and active campaigner against IR35 within the Labour Party for over two decades is the lead for the group on freelancer and self-employed issues.

In the event of a Labour victory, they propose an agenda on IR35 to a new Labour Government 'to help them deliver on their promise for a system that is fair for freelancers.”

Last week, Labour's Shadow Business Secretary, Rebecca Long-Baily told Radio 5 Live that they would need to consult on a sustem that is fari for those businesses and that they didn't think IR35 is 'appropriate'. She also admitted that they had 'serious concerns' and that it was something they 'are going to look at. She hinted that it might not

Labour Business's spokesman on self-employment and freelancing, Philip Ross said: "We welcome Rebecca Long-Baily's proposals to review the off-payroll regulations and potentially halt the April 2020 rollout."

Labour Business produced a report on the regulations in September and they were discussed in detail at a fringe meeting with Bill Esterson the Shadow Small BusinessMinister along with other off-payroll experts, the fringe meeting itself supported the proposals offered.

The report looked at the motivations behind IR35, its history and the recent implementation of the off-payroll regulations in the public sector. It draw on evidence from trade unions, the CBI, REC, IPSE and other business bodies.

As a conclusion the report called for significant reforms to the way that the self-employed are taxed and how it is governed and overseen and for the rollout of the off-payroll regulations to be halted. The report called for Labour to seize the initiative on self-employment and create modernised and effective way of managing them.

Philip Ross said: “We are pleased that Rebecca Long-Bailey and the team are seizing this opportunity to show that Labour is home of small business and the self-employed.

“We pledge to work with the next Labour Government and Rebecca to help them deliver on their promise for a system that is fair for freelancers. We have a set of proposals that are ready to go and help kick off any consultation.

“I look forward to working together with the expertise that we have in IPSE and the Stop-The-Off-Payroll-Campaign and the wider trade union movement and other business groups”

"Labour Business recognises the value and contribution that freelancers and independent professionals make to our economy. We want some common-sense proposals which aren’t just about squeezing out taxes but are about making self-employment sustainable and prosperous so that it benefits those engaged in the model, the clients that use it, and our economy as a whole."

The report concluded that:

  • Implementation of IR35 was not as successful in the public sector as HMRC suggest
  • The private sector is not ready for an April 2020 implementation
  • Issues of liability for taxes are not clear, clients do not want the liability and neither do Agencies.
  • Supply-lines of labour are far more complicated than envisaged by HMRC
  • Changes to IR35 will impact more than tax, they will impact prosperity and flexibility in the economy
  • Changes to IR35 suggest that some supplier roles cannot be done by an independent worker, but only by someone from a third-party consultancy
  • HMRC needs to be more accountable and transparent.

The report recognised:

  • the issues of compliance and the need to collect taxes from the self-employed
  • that much of the problems are with freelancers using a limited company
  • there is not enough case law around self-employment and it is certainly not keeping up with changes to the employment and business market
  • that employment rights and tax status need to be aligned.

Sectorial basis
Philip said that Labour Businesses thinks that self-employment and the use of Limited Liability companies (also known as Personal Service Companies PSCs) needs to be considered on sectorial basis as well as across the whole economy. Self-employment and its use is segmented as studies have shown and policies on self-employment and IR35 need to reflect this too.

In the event of a Labour Government, the group said it will be formally putting the following proposals:

  • Introduce a new business model for freelancers: Freelancers’ Limited Company (FLC) and amend guidance on IR35 to take into account its use
  • Revise guidelines on key tenets of self-employment by industry sector; such as substitution, MOO and others.
  • License use of a FLC by industry sectors allowing third parties like Trade Unions and Trade Association to be accrediting organisations
  • Define a 4-year window for review of Freelancing policy and use of the FLC. Review effectiveness around the issues of tax revenue; flexibility and prosperity add employment rights. To be considered on sectorial basis.
  • Make HMRC a Ministerial department and formally appoint a Minister for HMRC
  • Suspend new IR35 roll-out to private and public sector, keep liability with the freelancer. Only move forward when considering results of Taylor review.
  • Retain the IR35 forum, but with an independent chair
  • Revise the CEST tool for establishing employment status by sector. CEST tool to use agreed precedents and cases and rules. To be agreed by the IR35 Forum as a governing body.

Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.

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Susie Hughes © Shout99 2019

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