IPSE put your questions to the Small Business Minister – what did we learn?
IPSE - The Self-Employment Association
Where self-employment works for you.
By Fred Hicks, Senior Policy and Communications Adviser?
Government’s relationship with the self-employed has been put under significant strain in recent years. Gaps in pandemic support schemes, damaging reforms to IR35 rules, and a seeming reluctance to even acknowledge the sector’s contribution have left many wondering if this government is truly on their side.
For his part, Minister for Small Business Kevin Hollinrake MP – who joined IPSE’s webinar yesterday (20th April) – reiterated his support for solo business owners, saying: “for those people who are genuinely self-employed, and want to trade in that way, we should make sure that the rules are fair to them…”
Unfortunately, we at IPSE know that, too often, this isn’t what’s happening.
Why the fight against IR35 isn’t over
During the session, IPSE’s Director of Policy Andy Chamberlain pressed the Minister on IR35’s impact on single-person businesses; this includes a point we often hear made by our members, which is that the off-payroll reforms create an unfair advantage for large consultancy firms vying for public sector contracts, as well as how compliance fears by risk-averse clients have made independent contracting almost impossible in some sectors.
We were never going to hear a government minister acknowledge IR35’s flaws live on IPSE’s webinar, of all places. Nonetheless, Mr Hollinrake did stress that he wants to see proportionate rules to deter disguised employment without impacting the genuinely self-employed, and offered to continue working with IPSE to make this a reality – although he also asked us to bring the evidence.
Having conducted extensive research into the impact of IR35 and the off-payroll reforms from both the perspective of both contractors and clients alike, IPSE has an abundance of evidence to show that the rules aren’t working as they should. And with our first annual IR35 survey closing last month following a huge response from our members, there’s yet more to come.
But the Minister’s challenge is yet another reminder why your support and participation in our surveys, webinars and Meet-Ups is so important when it comes to the fight against IR35, which is far from over.
Umbrella market intervention still on the table in some form
Whether or not they agree with it, many contractors now find themselves working for their clients via an umbrella company. However, unlike agencies, umbrellas are not subject to specific regulation, and contractors entering the sector for the first time are rightly concerned about the impact this could have on them.
This is something government did, at one point, commit to changing, with a commitment to bring the sector into regulation under a new ‘Single Enforcement Body’. However, with it being more than a year since government closed its call for evidence on the umbrella market and no new major policy activity since, many in the sector have been left to wonder if regulation is ever going to happen.
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Addressing the wait for an announcement, the Minister was unequivocal about government’s commitment and desire to tackle the problems in the umbrella market and reiterated that an announcement is coming soon. However, Mr Hollinrake was much cooler about the prospect of a Single Enforcement Body and suggested that there may be ways to tackle some of the problems sooner than creating a new regulator could provide for.
Whilst we will ultimately have to wait and see what happens, the discussion did little to dispel reported rumours that plans for a new Body have been shelved in Whitehall.
Improving UK payment practices
We also discussed government’s ‘payment and cashflow review’, a programme of work to review the range of measures government has, and could have, to improve the speed at which commercial invoices are settled – a particular problem for the self-employed, who can often face financial volatility due to a late paying client.
IPSE is responding to the review, pushing for more transparency in the reporting of a company’s payment practices in director’s reports and for government to be more proactive in challenging firms who consistently report long payment terms. This comes following our call for a standard UK commercial payment term of 30 days.
Not wishing to rule anything in or out, the Minister declined to commit to anything specific whilst the review is still open, although he did acknowledge the Netherlands’ recent introduction of a 30-day payment term in law is an example his officials have looked at in their work.
Supporting the self-employed – too little, too late?
Throughout the session, it was impossible to ignore the volume of questions and comments from our audience which spoke to the degree of frustration that many feel about how government’s actions have impacted their businesses.
Many feel that working for oneself is becoming prohibitively difficult – either because it no longer provides a sufficient reward for the risk they take on, or because the very ability to work independently has been undermined by an inflexible approach to the employment status rules.
These are issues government must make rapid progress on if it is to win back their support, and IPSE will continue to work with the Minister for Small Business and others across government to push for improvements to the environment for millions of the UK’s smallest business.
Nice try, but the minister will very soon be out of job, because soon there will be no more small consultancy businesses. The logic that all "big businesses" that pay all those lovely taxes were one small business seems to escape those who make the tax laws. If the government wants to raise NI and income tax on dividends, it should just legislate for it rather than supporting a bunch of artificial payroll providers that add no value through IR35 legislation.