Consultation on 'false self-employment' comes to an end

New rules proposed by HM Revenue and Customs on 'false self-employment' will bring in more tax for the Exchequer but will not provide better employment protection to those self-employed contractors caught by the new rules, according to one contractor accountancy group.

According to HMRC, the proposed rules aim to tackle signs that 'some companies and Employment Businesses are using employment intermediaries to disguise the employment of their workers as self-employment primarily to avoid employer National Insurance and reduce the costs associated with workers' employment rights.'

Graham Jenner, Director at specialist accountants, NoPalaver Group, said: "HMRC will benefit from bringing in more revenue from National Insurance contributions, but contractors will suffer from lower net pay and they won't have any more employment rights than they do now.

"HMRC said that one of the main reasons it wanted to tackle instances of false self-employment was that self-employed contractors were being denied the rights afforded to employees, such as holiday pay. However, while its proposals may treat self-employed contractors as employed for tax purposes, they will not result in greater employment protection for the workers who are affected.

"HMRC said that clamping down on the avoidance of National Insurance contributions was also a key reason for the changes: its proposals are much more effective in achieving this goal."

The consultation closes February 4, 2014.