Workers that are employed by organisations such as Uber and Deliveroo could have the tax that they owe taken at source, despite many of them being considered as self-employed, according to leading accounting, tax and advisory firm Blick Rothenberg.
Firm partner Lee Hamilton announced that the Office of Tax Simplification (OTS) has published proposals which would make it easier for the platform workers to pay the tax owed to HMRC, though they are currently required to register for self-assessment as many are considered to be self-employed.
“This should make it a lot easier for people who work for organisations like Uber and Deliveroo on an ad hoc basis using some form of technology platform to secure work,” Hamilton added.
The Blick Rothenberg partner drew attention to the “spate of recent employment law cases” which have involved the platform organisations, which focused on whether the individuals should be deemed workers for employment law purposes. As an employee of a company, workers have certain entitlements such as being paid the national minimum wage and paid holiday leave, whereas those that are self-employed do not benefit from this.
However, Hamilton stated that “confusingly”, for tax purposes, there is currently no ‘worker’ status. This results in some platform workers being classed as ‘workers’ for employment law purposes but, depending on the individual circumstances, may be self-employed for tax purposes.
“Currently, these workers are required to register to file self-assessment income tax returns in order to report their income and pay tax. This can be an onerous process for someone who perhaps works sporadically and is not used to filing tax returns,” he added.
“It often means that these workers are caught out by the revenue and are fined for not making their returns on time or at all.
“Now the OTS are suggesting a withholding tax for such workers (similar to PAYE for employees) to collect tax. Their aim is to make tax more straightforward for Platform Workers. Withholding would be operated on profit by the platform (as opposed to gross remuneration) which means that there should be a mechanism for individuals who are deemed self-employed for tax purposes to set off qualifying expenses against their gross income which in turn should mean that not only will these workers be paying what they owe, they will be able to claim legitimate expenses against the tax that they owe and this will be taken without them getting into the complicated area of self-assessment.”
Hamilton thinks that the government will support the principle of a withholding tax for platform workers, as it means that tax is more likely to be collected, but noted that the benefits of simplification will need to be “balanced with the cost and practical difficulty of implementation”.
“No doubt there will be much resistance to such a move since self-employed people currently enjoy the cash-flow advantage of paying their tax at year-end. However, with technological advancements and a drive to maintain tax revenues, it is not beyond the realms of possibility that we will see this on the agenda over the next few years,” he concluded.
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