Freelancer group call for tax overhaul

A report from freelancer group, the Professional Contractors Group (PCG), is calling for an independent review of business tax, followed by a period of stability in the tax system with none of the constant chopping and changing of recent years.

PCG's managing director John Brazier said: "Our new position paper represents a significant contribution to the debate around taxation in the UK. In it, we identify where the problems are, and some of the solutions; but what we really want to see is an independent review deciding the exact shape of new reforms in a genuinely consultative manner."

The paper recommends that the independent review's changes should be implemented over the course of the next Westminster parliament, and that for at least the parliament after that there should be no significant changes to the tax system: if the Government wishes to increase or reduce the tax yield, it should do so solely by varying rates.

Taxation

PCG's paper also outlines how it wants to see freelancers taxed in future. Above all, it calls for self-employed people to continue to be taxed differently from employees: the self-employed receive fees for providing services and are exposed to commercial risk; they must not be taxed in the same way as employees, who receive salaries for providing labour and are not exposed to risk.

The paper also calls for employment status to be defined in statute, the restrictions on sole traders being paid gross by agencies to be removed, and IR35 to be repealed.

The PCG claimed that with this combination, freelancers will have fair and simple taxation, while the Government's concerns about "disguised employment" will also be addressed.