Tuesday 8 December 2015

This Chancellor is Definitely For Turning!

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP
Although some pundits have claimed that there were no shock announcements in the Autumn Statement, to me there were some quite unexpected and, from the Battle-Axe’s perspective, far from pleasing announcements.
The biggest headline grabber was undoubtedly the U-turn on tax credits.  Whilst most people seem to agree that the system needs to be completely overhauled to make it more attractive for people to work and strive to improve the quality of life of their family, we felt that what had been proposed harmed those who were trying to do just that.  Time for the Chancellor to re-do his homework!
For a long time, the Battle-Axe has been calling for a reform of the rates system.  So, the announcement of the abolition of the Uniform Business Rates and passing powers to local authorities is a step in the right direction.  However, the current proposals don’t go far enough because there is still the serious and outstanding issue of the movement in relative property values to be addressed.  So whilst Mr Osborne has rotated slightly on this he’s not turned enough for me.
One very welcome volte-face was over the proposals on travel expenses for contractors/freelancers.  
It seems that for now only the few that are caught by the draconian rules of IR35 will be affected.    I say “for now“ advisedly – HMRC and the Treasury are still muttering away about root and branch changes to the rules on the treatment of contractors. 
 Let’s hope that the potty proposals that were run up the mast recently implying that anyone on a contract lasting more than a month must be an employee have also been brushed right under the middle of the plush carpets of No 11.
Despite promising not to raise any of the existing taxes, Mr Osborne has managed to introduce another payroll tax – the apprentice levy.  
So businesses will be paying to train their staff and pay the levy – nice one George! 
Whilst it won’t (at least initially) hit smaller businesses you have to wonder how long it will be before the “allowance” that removes the new tax will disappear.
On a side note, the allowance against the apprentice levy was pretty much the only acknowledgement that there are small and medium sized entities driving the UK economy. 
The Battle-Axe’s team looked in vain for any really assistance to this massive section of the employing community.  Again, a missed opportunity to underpin a major driver of the UK’s economic growth disappointingly eclipsed by more grand political gesturing about the Northern Powerhouse and selling off of old prisons.
Oh, and don’t even get me on to the potential effect that the spending cuts will have on the already appalling quality of service we see from HMRC……right at the time when we’re all going to get our own digital tax accounts! 
Given that HMRC can’t currently match up the figures on their portal to the amounts they agree taxpayers owe or are owed goodness only knows what chaos the combination of personal digital tax accounts and spending cuts will have.
All in all, the Autumn Statement seems like an attempt to please various groups of highly vocal lobbyists and lacks focus on what is important to the wellbeing of the UK. 
We believe that this was a missed opportunity to help get people working to grow the economy.  Chances to make taking jobs really benefit people and to help employers to afford to expand their workforce and spend less time on red tape could (and for me should) have been in there.

Let’s just hope the Spring Budget is a bit more coherent.