Budget: Expected increase in HMRC activity

UKTECH continues its round up of Budget hopes, fears and predictions from trade bodies and commercial groups with the views of Martin Hesketh, managing director of specialist accountancy firm, Brookson.

Martin gives Brookson's predictions on what decisions he thinks the Chancellor will make on March 21 and how this will affect the flexible workforce:

• The Chancellor needs to continue to do all he can to stimulate and support economic growth in the short term.
  
• Small business is still choked by unnecessary regulation and often not getting access to required finance - we need to find measures to help businesses with this.
  
• The flexible workforce in general and more particularly the freelancer / contractor / self employed professional element is still not being supported well enough by this Government and we would hope this critical 'missed opportunity' for economic growth will be addressed by the Chancellor.
  
• Call for more realistic administration and enforcement activity by HMRC on IR35
  
• As with every Budget there will be changes to tax rules which will produce 'winners' and 'losers'.

Martin Hesketh "There are positives ahead of the Budget next month. According to February's inflation report, the Bank of England sees no sign of the UK dipping back into a recession and predicts the economy will grow by 1.2 per cent. It also forecasts that inflation will continue to fall in the coming months.

"In this context, we support the need to get the UK deficit and debt levels down as the Government are currently trying to, but notwithstanding this aim, I feel the Chancellor should use this Budget to continue to stimulate economic growth wherever he can.

"Small businesses still don't have the access to finance they require and unnecessary red tape and regulation is stifling their growth and I would like to see a more concrete strategy as to how this is going to be addressed.

Contractors

"For the contractor and freelancer community, we still see strong evidence that the key role of these workers remains unrecognised and unsupported by Government. Much of the recent media coverage and political reaction to the 'limited company working' stories demonstrates this lack of understanding really starkly.

"Contractors and freelancers are helping UK business – large and small - to start investment and development activity early, thereby directly supporting UK economic recovery. And they are doing this despite the unhelpful legislative environment.

"I would like to see the Chancellor recognise the genuine competitive advantage that self-employed workers bring to the UK economy by delivering specific measures that encourage and support these entrepreneurial individuals who are providing key skills and services across all industry sectors.

IR35

"IR35 still remains a controversial topic for contractors, freelancers and self-employed professionals and we hope to see some positive progress reported from the current IR35 Forum activity on how enforcement activity by HMRC will be more realistically targeted and efficiently carried out.

"We do expect an increase in HMRC activity around employment status in the new tax year and we would recommend to all self employed professionals that they should engage with their professional advisors to ensure they can clearly demonstrate their self employed status if challenged.

"The onus is very much on the Chancellor and the Government to stimulate growth wherever they can in the short and medium term and I would like to see this involving them encouraging the entrepreneurial spirit of the freelance sector and providing an appropriate environment for them to flourish in.

"In terms of specific tax changes, I would expect few and minor changes as the economy is still obviously fragile and so the Chancellor's room for manoeuvre is pretty tight. I could see further erosion of tax relief on pensions for high earners and also some minor personal allowances changes or other measures targeted at lower paid individuals. I personally would support a reduction in employer national insurance contribution levels to support small businesses, but I am not sure we will see this. Overall, I would expect very few 'big ticket' changes in tax terms."

Full coverage before, during and after the Budget will be available in the Political News section of UKTECH. The Budget will take place on March 21.