The Government must change the tax system following the Public Accounts Committee report on public sector use of permanent freelancers without using measures that ‘turn off the talent tap’, freelancing body the PCG has warned.
The report by the all-party committee of MPs claimed too many workers in the public sector, including the BBC, are making their own arrangements to pay tax and national insurance, which according to the committee could allow them to contribute less. The BBC has ordered an internal review and Lord Patten, the chairman of the BBC Trust, says he expects this to result in some freelancers using personal service companies being put on the payroll. He hopes other public sector organisations will follow suit.
John Brazier, Managing Director of PCG, says that rather than address the issue of a tax system that’s not fit for purpose, the committee’s report is in danger of making recommendations that could encourage Government departments to ban the use of freelancers outright.
“It may be that current tax policy does not include appropriate provision for this way of working, which can give rise to tax avoidance opportunities for a minority, but the solution is not to outlaw freelancing wholesale within the public sector, as Margaret Hodge and her colleagues are dangerously close to suggesting within their report,” he says.
“The jobs market is changing, not just here but across Europe. The Government, rather than taking the retrograde step of attempting to push back against that change simply because it causes a few taxation difficulties, must develop a more sophisticated tax policy that changes with it. A tax system equipped to deal with 21st century working.”
Brazier says the PCG will continue to work with Government and all interested parties to improve the tax system so that the UK is able to keep pace with the change. He added: “Everyone should pay the right amount of tax. PCG has been and will continue to be robust on this issue and a simple, fair and easy-to-enforce system will ensure this happens. The Government is in real danger of damaging a vital way of working just because it refuses to put its thinking cap on when it comes to tax.”
The number of working mums choosing to freelance has grown rapidly in recent years.