OTS examines the ‘gig economy’

The Office of Tax Simplification has published a paper to promote discussion on how workers, engagers and platforms in the ‘gig economy’ interact with the tax system. The paper considers matters including: individuals with multiple income streams; the involvement of engagers and whether employment taxes are due; and the differences between employment status and employment rights.

With the government running a number of concurrent studies and the recent Uber employment tribunal case making headlines, the OTS is concerned to ensure that tax aspects are considered.

The paper defines the terms:

·         ‘gig’ is where organisations and independent workers contract for short-term engagements;

·         ‘sharing’ in this context means generating money by sharing or renting out assets; and

·         ‘platform’ is the use of IT systems to facilitate/connect opportunities for gig/sharing.

The OTS raises the following tax issues for discussion:

·         the individual worker who contracts for a gig: are they employed or self-employed for tax purposes? How do they interact with the tax system? Is the system simple for them?

·         the platform operator: could they become more involved beyond simply sorting out their own tax position?

·         the individual or company who is offering the gig: does the hirer have any role?

·         HMRC: the tax system has existing rules, systems to gather data and ways of assessing that will apply to those working in the Gig and Sharing Economies, just as to the generality of taxpayers. But what of the practicalities? What about knowing who the individuals are in the first place and then managing the increased monitoring load?

·         the exchequer: does gig working mean lower tax receipts, particularly of employer NICs?

See www.bit.ly/2gHQdw2.