Campaigners for taxpayers on low incomes have given a cautious welcome to a call for evidence launched today on ways in which online platforms could act as intermediaries between their users and HMRC by enabling users to understand and comply with their tax obligations.
Anne Fairpo, Chair of the Low Incomes Tax Reform Group (LITRG), said:
“LITRG welcomes anything that can help workers navigate their tax affairs easily and accurately, but it is often unclear whether a worker in a particular situation is self-employed or employed and resolving that question is a prerequisite in determining how they should be taxed. Also, HMRC should not forget the necessity of enforcing tax compliance among the engagers of labour.
“Online platforms have many uses, and their role in matching engagers with providers of labour has recently come under scrutiny in the Matthew Taylor report Good work. In addition, a series of court decisions have explored the true status of gig economy workers, and often found that it is at odds with how the workers are labelled by the engagers of their labour.
“Anything that makes it easier for gig economy workers to determine their true status and pay tax and NICs accordingly – and for the engagers of their labour to pay employers’ NICs wherever appropriate – is to be welcomed. It must be acknowledged that the primary responsibility for helping workers get their tax right rests with the authorities, given the confusion around status and the general lack of financial capability within much of the population.
“One solution might be to enable platforms to operate something akin to the construction industry tax deduction scheme, but at a rate that would minimise the number of situations in which workers have to claim refunds of over-deducted tax. Final adjustments could be made by means of a simple reconciliation process at the end of the year.
“And of course where the engager of an individual’s labour falsely describes the nature of the engagement (for example representing that the worker is self-employed when in reality he or she is employed), the blame for non-compliance should be placed squarely upon the engager. In such cases it is up to the tax authority to enforce the law without involving the worker who is often an innocent participant in an attempt by the engager to avoid tax and NIC obligations.
“If online platforms can have a role in helping HMRC in its task of enforcement, the engager in its duty to apply the correct status, and the worker to pay the right tax at the right time, some headway will be made towards solving what now seems an intractable problem.”
Notes for editors
1. Low Incomes Tax Reform Group
The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk (Out of hours contact: George Crozier, 07740 477 374)More Articles by Chartered Institute of Taxation (CIOT) ...