The recent 21st-century workforce proposals emphasise the need for joined-up thinking to achieve certainty, clarity and simplicity for workers and employers alike.
While the government has yet to formulate its response, proposals made in the Taylor review are likely to fundamentally change the rights profile of many workers in the UK economy. While those changes are driven in part by the need to address new working methods, and the desire to protect workers’ rights, it is important that changes made as a result of the Taylor review can be implemented confidently and without an additional, onerous administrative burden being imposed on all those who are affected.
Although the Taylor review did not extensively address the related questions of taxation, HMRC is a major stakeholder in this debate. It is extremely important that the income tax and national insurance contribution liabilities of all those affected by changes flowing from the Taylor review – employers and workers – mesh logically and coherently with the new workplace regime. Failure to do so will result in unwarranted uncertainty and difficulty for those tasked with accounting for income tax and NIC either through the operation of PAYE or through self-assessment tax returns.
The current furore over the payment of the national minimum wage for night workers who are required to sleep on site under the terms of their contract, which many see as reflecting a change of interpretation by HMRC, has forced the government to act in a situation where it would have been far preferable for HMRC to apply a clear, consistent policy to NMW enforcement from the outset. Knee-jerk reactions to address deficiencies in administrative processes are never desirable. With the Taylor review likely to recommend changes which affect a large proportion of the UK workforce, there is absolutely no excuse for HMRC not to be entirely clear, certain and direct as to how it will apply income tax and NIC in respect of the new workplace arrangements.
The recent fiscal risks report published by the Office for Budget Responsibility acts as a sobering reminder of the vulnerability faced by the UK tax system. Income tax and NIC changes which respond to the Taylor review simultaneously provide the Treasury with the opportunity to reduce some of these vulnerabilities. This is not an opportunity to be missed; Parliament must allow adequate time to debate the changes in the round, to legislate accordingly and to ensure that Civil Service departments are adequately resourced to develop administrative procedures which can be applied consistently across all departments involved. Inconsistencies between departments help nobody.