Reply to post: Hopefully they can make fairer rules and less of a crap-shoot

Hopefully they can make fairer rules and less of a crap-shoot

There are some key facts about contractors:

a) A contractor does not receive any employment protections, unlike an employee

b) A contract does not receive sick pay (even statutory amounts), unlike an employee

c) A contract has to file annual tax returns, unlike an employee

d) If earnings are above a threshold they have to be VAT registered, unlike an employee

e) A contractor does not generally expect an annual bonus, unlike an employee

f) A contractor is less likely to expect to be considered for promotion

g) If there are some economic headwinds, a contractor is more likely to accept a pay cut

h) When there are cuts, a contractor expects to be in the firing line and gets on with doing their job while the employees try to ensure alternatives are considered, etc

i) When a role is cut, a contractor expects to work until their last day where an employee may expect to be paid in lieu as well as redundancy

j) A contractor does not receive paid holiday time

k) A contractor generally pays for their own training

I could go on. However, the point is that HMRC should recognise that the contracts themselves are worded in a way to ensure the contractor does not receive the various statutory protections of employment. Businesses benefit from the flexibility of having access to skills that they can retain or release at will. Employees benefit from having a layer of more disposable workers as employees would have first claim on any alternative roles within the company and the company would be expected to cut contract workers first as they're not employees. Contractors benefit from favourable taxation in return for this. Since dividend taxes were introduced in recent years there's a much reduced benefit to being a contractor over being an employee, so it's about time HMRC accepted the remaining different as the perk of accepting the complete lack of job security and has expenses that an employee doesn't. It's a situation that has worked for many years for workers and businesses.

Since the business has benefited from the flexibility of the arrangement while the contractor has not received any of the statutory perks of employment like holiday pay, surely it's reasonable HMRC should be targeting the business not the contractor about any additional tax payments anyway?