Government must end 'war on contracting' say loan charge and off-payroll tax campaigners

Campaigners are calling on Boris Johnson to suspend two controversial policies. Picture: PA
Campaigners are calling on Boris Johnson to suspend two controversial policies. Picture: PA
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THE Prime Minister and Chancellor must end the ‘war on contracting’ by scrapping two policies which are making life harder for thousands of workers, campaigning groups said today

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>MPs voice concerns over the loan charge
>Loan charge suspension would allow PM to break with past
Eleven organisations have written to Boris Johnson and Sajid Javid calling on them to suspend the loan charge and stop the roll-out of the off-payroll tax.

The organisations - which include The Stop The Off-Payroll Tax campaign and the Loan Charge Action Group - are urging the Government to take action on policies that are causing “huge concern for contractors and freelancers”.

The letter calls on the Government to halt the roll-out of the off-payroll tax, which it says is an effective 14.3 per cent stealth tax on business.

It adds; “To circumvent this huge extra cost to business, many large firms are already seeking to outsource jobs overseas, causing British workers to lose work to untaxable contractors in other countries.

“The notion that flexible workers will be classified in law as “employees for tax purposes only”, without any of the normal protections and benefits of security is contrary to the Good Work Plan and grossly unfair. The extra sums that firms pay to hire on-demand contingent workers..covers their holidays (when contractors/freelancers are not paid) and compensates for the insurance they require against periods of sickness or inability to work for any other reason. It is also used by flexible workers to pay into their pensions, which successive Governments have encouraged.”

The letter also calls for a suspension of the “outrageous and retrospective loan charge”. It describes the loan charge as “a shocking changing of the law that overrides established statutory protections for individuals and undermines the rule of law by taking away a citizen’s right to challenge HMRC in court over sums that have never been legally proven to be due”.

The letter notes that, at the Carlisle Conservative leadership hustings, Mr Johnson said that the loan charge “seems superficially unjust” and that “there should be an independent review”.

The letter adds: “We urge you to stick to that clear belief and suspend the Loan Charge now and order the much-needed independent review, something publicly supported by 78 Conservative MPs”.

A Treasury spokesperson said: “The off-payroll reforms will mean that two individuals working in the same way pay broadly the same income tax and National Insurance contributions, even if one of them works through a company.

“The loan charge is designed to tackle tax avoidance and ensure everyone pays their fair share. It builds on more than two decades of HMRC action to challenge these schemes.”

The PM and his ministers will be setting out more details on their planned policy agendas over the next few weeks and months, the spokesman added. Decisions on tax are for the Chancellor to announce at fiscal events, the Treasury spokesman added.

The loan charge was introduced in response to the Treasury’s concerns about “disguised remuneration schemes” which involved individuals being paid through loans, usually via an offshore trust in a low or no tax jurisdiction, which they did not have to repay.

According to the Treasury, the loan charge means people paying themselves through loans will have to contribute their “fair share” to pay for public services.