Tax Talk: The Self‑Employed Dilemma
Redwood’s Concerns
- John Redwood, the Wokingham MP, warned that the number of self‑employed folks has plummeted since 2019, thanks in part to the IR35 muddle.
- He called out the sharp drop of 800,000 self‑employed workers and highlighted how vital they are to the economy.
- “When a freelancer wants to hire a couple of helpers, the bureaucratic mountain and extra taxes rise like a bad sequel,” he said. “We have to make the climb as gentle as possible for them to grow their businesses.”
Chaplin’s Counter‑Point
- Dave Chaplin of IR35 Shield agreed that the reforms have been a pain for genuine small businesses.
- He reminded everyone that IR35 was meant to stop tax avoidance, not crush honest work. The original 1999 promises were to keep the impact on ordinary businesses minimal.
- He cited the long‑running fight between HMRC and IT consultancy RALC Consulting, noting that the uncertainty over contract status has left the firm teetering on insolvency.
- He said RALC’s story shows how the current tax system can turn a good, small business into a “shining example” of oversight.
- In a nutshell, Chaplin asked for a modern tax system that respects taxpayers’ rights, curbs HMRC’s unchecked power, and, most importantly, protects the soul of entrepreneurship.
The Verdict
Both voices are in unison: 800,000 self‑employed workers have vanished and some, like Richard Alcock, have gone bankrupt because of IR35. The reforms, according to Redwood and Chaplin, are not only ineffective but anti‑growth. Parliament must urgently rethink the entire approach and consider a kinder, brighter alternative.
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