Outdated tax system reason behind gaps in Covid-19 support, says IPSE

(3 minutes to read)

IPSE: ‘The UK’s hopelessly outdated tax system played a key part in ensuring over 1.5 million self-employed people were excluded from support.

A new report by the Public Accounts Committee stating that ‘quirks in the tax system’ led to gaps in Covid-19 support has been very much welcomed by the IPSE.

The Association of Independent Professionals and the Self-Employed (IPSE) agree with this, believing that an outdated tax system is a key factor to so many self-employed missing out on government grants offered due to the pandemic.

The Public Accounts Committee is calling for HMRC to publish an explanation as to why certain self-employed tax groups, such as those new to self-employment, were excluded from the financial support.

Andy Chamberlain, Director of Policy at IPSE, said, “The UK’s hopelessly outdated tax system played a key part in ensuring over 1.5 million self-employed people were excluded from support. Because of the many quirks of this system, government has claimed it is too complex or prone to the risk of fraud to help people such as sole directors of limited companies, PAYE contractors and the newly self-employed.”

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Chamberlain added, “However, HMRC has never clearly explained the obstacles to getting support to these groups, and we welcome the Public Accounts Committee’s calls for them to do so. We also believe it is absolutely right for the Committee to push HMRC to outline steps to overcome these obstacles and get support to the many self-employed who are still desperately struggling.

“We welcome, too, that the Committee has highlighted the inherent unfairness of the IR35 regulations, which are a poor patch-up of our outdated tax system. We are deeply concerned government is still pushing ahead with the very damaging changes to IR35 in April, when the self-employed sector will still be at its most fragile. We urge government to change course on IR35, plug the gaps in support and, in the longer-term, commit to a structural overhaul of the tax system to make it work for the self-employed.”

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