Contractors to have their say on the OTS employment status review

Contractors will soon be able to discuss the new review into employment status with the Office of Tax Simplification (OTS).
 
Approved by the Treasury last week, the review is of the dividing line between employment and self-employment and “whether it is drawn in the right place and in the right way”.
 
IR35 will not be considered as part of the review, on the basis that the OTS has already scrutinised the legislation and made recommendations on it in 2011.
 
The key areas the OTS will consider are whether the UK’s current employment status tests result in “real uncertainty” and, if so, for what sections of the workforce and in which areas.
 
The OTS will be examining how well existing rules and guidelines fit with situations in the labour market where contractors, for example, have multiple roles.
 
This stems from their belief that because the boundary between employed and self-employed professionals “has not kept pace with changing work patterns”, some people can now be both.
 
In particular, the OTS believe there are an increasing number of people working for multiple businesses but can be classed as employed in one job but self-employed for other work.
 
An OTS spokesperson said: “There are significant tax and NIC differences between employed and self-employed status. Getting the status wrong in a working arrangement can be very costly.

“Potential tax and NIC benefits and risks drive business behaviour, exemplified by many of the personal service companies that are in use (though many are simply sensible vehicles for the taxpayer’s operations).”
 
Although the employment status review is already underway, the OTS is yet to provide details of how interested parties such as contractors can contribute their own thoughts, but plans are afoot to update its website in the near future.

Date published 7 Aug 2014 | Last updated 7 Aug 2014