This week's opinion: 15 April 2021

I read the Low Incomes Tax Reform Group’s report on labour market intermediaries with great interest (tinyurl.com/litrglmir). It is an impressive piece of work that brings clarity to an area which, even to those involved, can be highly confusing. The issue provokes strong views. At one extreme there are those who say that anybody involved in an umbrella arrangement is a tax avoider; at the other are those who say that the tax rules are deliberately designed to frustrate freelancers who want to run their own businesses. The truth, as ever is somewhere in the middle. The report does not shy away from discussing areas of abuse, but it also explains in some detail how the growth in labour market intermediaries is a natural consequence of developments in the economy and the evolution of employment law. 

What struck me more than anything, particularly with the landscape laid out so clearly, is what an incoherent mess we have got into over all of this. I have been lucky that throughout my working life I have had no doubts about my employment status. But had I taken up some sort of freelance contracting role I am not sure that I would have been able to navigate through this complex maze, so I have no idea how somebody without tax experience could possibly cope. 

There must be a better way. The Taylor review of modern working practices (tinyurl.com/tayorrmwp) was useful but did not deal in detail with taxation or spend much time looking at the role of intermediaries in the supply chain, so there is scope for further work to be done. But there is no point in looking at this piecemeal – we have to find a solution that not only works for tax and employment law but also reflects the realities of the market place.