Workers of the world…

April 1, 2023

Disappointingly there was nothing in the Budget about the vexed issues of IR35 or of the rights and responsibilities of “workers”: those people with the intermediate status, neither employed nor self-employed but working gig to gig. Fortunately there has been a great deal of work going on behind the scenes and I am, today, in a position exclusively to announce that the problem has been solved.

The solution, of course, was there all along. The CIS (Construction Industry Scheme) bypasses status issues by the simple trick of letting HMRC determine the status of subcontractors. They are either paid gross or net. The contractor who pays them just has to find out which, and they can do that by getting HMRC to tell them. It was a bit laborious to set up, but it’s now pretty well understood across the industry and seems to work pretty well.

So why should it just apply to the construction industry? It’s illogical and, you could argue, discriminatory. (How many women hold CIS status decisions, eh?) I am able to reveal that the General Industry Tax Scheme, GITS, will now offer a simple solution to all the vexed issues of workers, contractors, and disguised employment.

Every individual, every business and every company will be paid under deduction of tax unless they can demonstrate they have permission to be paid otherwise. Payments will be made from special taxpay bank accounts. It will become a condition of a banking licence that such accounts are available to any individual or entity. Businesses will deposit money into the account and immediately 37.5% will be deducted and paid over to the government. The remainder may be paid to any business or individual and no further tax will be payable by either the payer or recipient from this flow of funds.

Of course there will be considerable advantages to opting out of that system and this is where the GITS status decision comes in. A business which can demonstrate that it has paid its taxes in full on time for the previous six years will be eligible to apply for a decision that they are a Licensed GIT and thus may be paid gross.

The TIIN for the change shows a cash flow advantage to the government of seventeen billion over the next six years. And who could possibly argue with that?

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