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Topic: The Taylor Review Released July 11th 2017 o

11th Jul 2017
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One really has to laugh at what passes, today, for Government and above all else the utter ignorance of Ministers and their cosseted advisers. Mathew Taylor’s Review (all 116 pages of it) is worthy of any of the Top ten “consultancy” firms, he seem to both sell their work on the weight and size of a final report and lard these with the latest buzz words and popular meaningless anodyne phrases. For example - Taylor: “Because, while having employment is itself vital to people’s health and well-being, the quality of people’s work is also a major factor in helping people to stay healthy and happy, something which benefits them and serves the wider public interest.” What, rather like enjoying a well paid job in Government with a gold-block  final salary, index-linked retire at 60 pension, for example? Fine and brave words, Mr Taylor; shame about reality...

For many years, successive governments have vainfully tried to tax and persecute small business out of existence: mainly since their covert objective was to have everyone working on Schedule E and paying under the PAYE system, monthly. An early Finance Act (1977 from memory) precluded agency workers from self-employment; since the reason they worked through an agency was no main employer would hire them, due to the unpredictable nature of their work pattern (models, actors, temporary workers et al) they were compelled to incorporate. The law of unintended consequences caught up. Many contractors, engineers, surveyors, cameramen and women, offshore oil rig skilled workers etc were unwittingly captured by this legislation.

“Foul!” cried a later government. and, thanks to its architect, a rather strange Minister called Dawn Primarolo pushed for new legislation termed IR35. Then we suffered a new initiative: both what was then IR and DWP decided they would declare a war on the self-employed and demand they substantiate their status as genuine contactors by proving a physical base, tools and equipment and multiple clients and so on. As a part of Brown’s war on those who had earlier complied with the Finance Act and incorporated, he decided to introduce the Non-Corporate Distributions Regime (NCDs); thereby punishing those who had followed the Revenue’s demand. Luckily, these were short lived.

The introduction of class IV NICs, imposed upon the self-employed (for which they received zero benefit!) in April 1975 has gradually escalated. This is simply a tax for daring to try and succeed and to create employment!

With the VAT threshold set low, even a one-man band who must purchase and supply expensive materials as part of his client service (e.g. plumber and heating installer) must add 20% onto his total client bill; which the client when a private individual cannot offset. The burden laid upon the self employed, is horrendous: Class IV NI: a VAT threshold which is set far too low: Employer’s NIC: a raft of statutory social security obligations, including SSP: SMP plus SPP: Auto-Enrolment: regulatory regimes including COSHH; Disability Access; keep on going.

The latest idiocy over MTDfb, adds perhaps the last straw, which is liable to break the struggling camel’s back. Government of all political stripe, continues to utterly ignore one critical salient factor: SMEs create and sustain circa 48% of the “Real” economy, i.e. private sector and simultaneously generate 45-7% of all UK private sector employment. furthermore, a segmented analysis of this crucial UK business sector shows the largest concentration of SMEs lies in the First Quartile; (i.e. between the smallest number and the median). Yet just today, the Prime Minister and all the usual rent-a-crowd politicians asked to comment by news media, waxed lyrical over the “Black Economy”! (I defy anyone to read and absorb the report – which is 116 pages of complex and obfuscating gobbledygook - in the time allowed since publication. Thus, as always, it was convenient party political soundbites!)

What would anyone possessed of half a brain honestly expect. In Shangri-La no doubt everyone could expect to work diligently at work they love with dignity, receive respect, recognition and just reward. Unfortunately, in the real World in which we live, now, the economic and social fractures are significant and growing.

Unemployment has created very much a buyer’s market. The cost of employment and the associated latent penalties, via Employment Law etc, have militated, collectively, to dissuade regular employment: hence the market has created the so-called “Gig” economy, Zero Hours contracts et al. Brown’s various Tax Credits simply exacerbated the core problems; since employers could pay less. And did. These Tax credits and indeed, any other similar subsidy is actually an open admission that a majority simply cannot afford to live.

Why?

Since Governments are totally bereft of any method, structure or policies which could be used to create a vibrant, successful British economic base. Indeed, since Thatcher, in final despair, they decided upon the encouragement of “Inwards Investment”. Which might “solve” the unemployment problems. Ministers trumpeted, repeatedly, their success in persuading foreign investors to set-up facilities in the UK. Then, rather like jilted brides, they scream, when major multinational transnational corporations, use Dual Taxation Treaties (Signed by successive governments!), to optimize their local taxes and ship large amounts of capital back to base!

What honestly did they expect? A corporation owes a duty of care to its shareholders, in that it will maximize ROI and thus the value of their shares and the dividends paid. In conclusion, contrary to Mr Taylor’s wishes and social objectives, nice and altruistic though they may well be, the reverse is increasingly happening and any further burdens placed upon SMEs and the self-employed will see the Black Economy grow as interest rates rise and price escalation increases.

Michael C Feltham

MCFA

 

(Addendum: for those seeking a migraine, The Taylor Review can be accessed here):

 

https://www.gov.uk/government/publications/good-work-the-taylor-review-o...

 

 

 

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