Newly formed Employment Status Consultative Committee writes to Exchequer Secretary to the Treasury
By Justine Riccomini, Head of Tax (Employment and Devolved Taxes)
18 September 2024
Find out more about the Employment Status Consultative Committee and why they have written to the Exchequer Secretary to the Treasury James Murray MP.
Is the current Employment Status framework fit for purpose?
This is the question that has been on the minds of employment taxes specialists for many years, but in recent times, it seems to have become ever more complex and difficult for employers and agents to navigate. The Judiciary has also commented in many decisions over the last few years that they are finding the current system unworkable.
What does that all translate into?
That essentially translates into barriers to doing business, complexities for inward investors in the UK, inflexibility in the labour market, exploitation of low-paid workers, increasing use of unregulated Umbrella Companies, and untold compliance risks, to name but a few.
The over-complicated decision-making process connected to deciding whether someone is employed or self-employed for tax purposes, and employed, self-employed or a worker for employment law purposes is burdensome in terms of administration, cost (including professional fees) and risk (getting it wrong and facing a challenge from HMRC or through an employment tribunal from an individual or group of individuals).
What can be done about it?
A group of employment taxes experts from various professional and representative bodies recently decided to form the Employment Status Consultative Committee (ESCC) and set up some Terms of Reference. The ESCC will meet once a month to discuss how to tackle the problems inherent in employment status decision-making, to try and find a better way which makes life easier for everyone - from the man on the street to the judiciary. A workable solution needs to be found as a matter of priority.
It’s a massive undertaking – and as one member put it – it’s like searching for the Holy Grail - but hope springs eternal and the group is passionate about trying to make this whole concept fit for the future – for everyone.
The first thing the ESCC has done is to write to the Exchequer Secretary to the Treasury (XST) James Murray MP to ask him to engage in a meeting with them as soon as possible. The ESCC agrees that for the framework to be deconstructed and re-designed, Ministerial buy-in is a prerequisite, so that policy teams at HMRC, HM Treasury and also DBT can work with the ESCC to consider all aspects of the planning and implementation of any new systems.
The letter to the XST and the Terms of Reference of the ESCC can be found here .
