It is busy on a lot of fronts. The hot topic is the taxation of contractors in the gig economy. The problem is that the scale of work outside traditional employment has grown considerably and tax and employment laws have not kept pace, so that there is no clarity as to who is an employee, a worker (a term not recognised in tax legislation) or self-employed. There are many developing status cases, both in the employment law and tax field, that are leading to a confusing picture. The changes to the IR35 regime from April 2020 will make the ‘fee payers’ liable for accounting for income tax and NICs for contractors engaged through personal service companies where, if they were engaged directly, they would be treated as employees. This shifts the burden (and potential liability) of determining the status of the contractors away from the personal service companies to the end clients. The processes for addressing the factual circumstances of contractors, assessing risks and dealing with the procedural requirements envisaged by the IR35 legislation are considerable, and it’s something with which clients will need a lot of help.
The gig economy is a hot topic across other jurisdictions as well. France is introducing new laws for particular sectors and, in Germany, the penalties for wrong characterisations of status can be criminal.
Brexit uncertainty is causing headaches. In the social security contribution field, it is disappointing that there is no clarity that there will not be a double charge to social security contributions where assignees are posted to another EU or EEA jurisdiction after a no deal Brexit.
If you could make changes to tax law or practice, what would it be?
Businesses need certainty, so the government should try to reduce circumstances where employers can be unfairly burdened with large unexpected liabilities. The taxation of gig economy workers is a case in point.
On the more positive side, companies are continuing to extend employee share plan participation to their employees. But the government should be doing more to reduce the compliance burden on companies. I would question, in particular, whether it is necessary to have such detailed conditions for compliance for the UK tax advantaged share plans. Small companies often struggle with the detailed requirements for compliance with the EMI regime. Some requirements just seem to be unnecessary; I do not see why (for instance) tax advantaged status should be threatened if employees are not given a full description on the restrictions on shares that they can acquire on exercise of EMI or CSOP options. Private company restrictions can be difficult to describe. Why is it the tax advantaged share incentive plan only provides for full tax favourable treatment if employees hold their shares for five years? Five years is a long time, and this requirement could be putting off younger or less well off employees from participating.
What do you know now that you wish you’d known at the start of your career?
Have confidence in your own judgement. If something does not look right to you, it is probably not (and it would be good to air the issue any way). Do not be afraid to speak up, even if you are junior.
As a partner, I really value all my team members forming their own views on particular scenarios.
Finally, you might not know this about me but...
My favourite hobby is weather forecasting. I think my seasonal forecasts are quite good, but then all weather forecasters say that!
It is busy on a lot of fronts. The hot topic is the taxation of contractors in the gig economy. The problem is that the scale of work outside traditional employment has grown considerably and tax and employment laws have not kept pace, so that there is no clarity as to who is an employee, a worker (a term not recognised in tax legislation) or self-employed. There are many developing status cases, both in the employment law and tax field, that are leading to a confusing picture. The changes to the IR35 regime from April 2020 will make the ‘fee payers’ liable for accounting for income tax and NICs for contractors engaged through personal service companies where, if they were engaged directly, they would be treated as employees. This shifts the burden (and potential liability) of determining the status of the contractors away from the personal service companies to the end clients. The processes for addressing the factual circumstances of contractors, assessing risks and dealing with the procedural requirements envisaged by the IR35 legislation are considerable, and it’s something with which clients will need a lot of help.
The gig economy is a hot topic across other jurisdictions as well. France is introducing new laws for particular sectors and, in Germany, the penalties for wrong characterisations of status can be criminal.
Brexit uncertainty is causing headaches. In the social security contribution field, it is disappointing that there is no clarity that there will not be a double charge to social security contributions where assignees are posted to another EU or EEA jurisdiction after a no deal Brexit.
If you could make changes to tax law or practice, what would it be?
Businesses need certainty, so the government should try to reduce circumstances where employers can be unfairly burdened with large unexpected liabilities. The taxation of gig economy workers is a case in point.
On the more positive side, companies are continuing to extend employee share plan participation to their employees. But the government should be doing more to reduce the compliance burden on companies. I would question, in particular, whether it is necessary to have such detailed conditions for compliance for the UK tax advantaged share plans. Small companies often struggle with the detailed requirements for compliance with the EMI regime. Some requirements just seem to be unnecessary; I do not see why (for instance) tax advantaged status should be threatened if employees are not given a full description on the restrictions on shares that they can acquire on exercise of EMI or CSOP options. Private company restrictions can be difficult to describe. Why is it the tax advantaged share incentive plan only provides for full tax favourable treatment if employees hold their shares for five years? Five years is a long time, and this requirement could be putting off younger or less well off employees from participating.
What do you know now that you wish you’d known at the start of your career?
Have confidence in your own judgement. If something does not look right to you, it is probably not (and it would be good to air the issue any way). Do not be afraid to speak up, even if you are junior.
As a partner, I really value all my team members forming their own views on particular scenarios.
Finally, you might not know this about me but...
My favourite hobby is weather forecasting. I think my seasonal forecasts are quite good, but then all weather forecasters say that!
