THE OFFICE OF TAX SIMPLIFICATION has launched two projects reviewing employment statuses in the UK and the tax penalty system, it has been confirmed.
The office is concerned the boundary between employment and self-employment has not kept pace with changing work patterns, leading to mistakes that can prove costly for both businesses and employees.
As such, the OTS is to examine whether the UK’s current employment status tests result in real uncertainty and if so, for what sections of the workforce and in which areas. This includes: sectors and types of engagement with the labour market where difficulties in administering the tax rules are relatively common for any or all of those involved with the tax system; how well current rules and guidelines fit with situations where individuals have multiple roles; whether the key distinction is between working and not working and, among others; and the special cases regulations, primarily as evidence of existing difficulties with the main tax rules.
It will not, however, examine IR35.
Its investigation into penalties will include the number and range of HMRC financial penalties issued to consider if they are proportional and have been targeted correctly; the number and range of financial penalties issued to consider if they have been successful in deterring non-compliance and generally influencing behaviours in the ways intended; whether the total number of different penalties could be reduced; n if there is another way to drive compliant behaviour that is more effective, cheaper and better targeted.
The body is headed by John Whiting (pictured) and seeks to remove extraneous and problematic elements of the tax code in order to ensure its efficiency.
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