The Future of Work presents a perfect storm to HMRC - will it swallow its pride and listen?

The ‘Future of Work’ has become an intensely debated topic at inniAccounts as we plan our strategic direction for the next five to ten years.

How people work, the jobs they will do and which jobs will be replaced by intelligent machines preoccupies board meetings. And rightly so, as I don’t think we would be doing our jobs properly if we didn’t consider what our clients (contractors), what their clients (FTSE100 / 250 companies) and what our employees (highly skilled accountants) will need to be successful.

Currently as we see it, contractors are the backbone to British business. They are delivering skill and expertise that businesses must have to deliver profit to shareholders yet can’t afford or don’t need long-term.  

But we regularly ask ourselves: will that change?

I read avidly on the topic and find myself sucked into the headlines such as ‘10 million jobs at risk thanks to automation’, as PwC declared earlier this year. As I scratch the surface though I find there is more reason to be positive than negative about the technological revolution we find ourselves stewarding.

For instance, the Future of Work Commission, lead by Tom Watson, found that the ‘apocalyptic predictions about the impact automation will have on jobs are far too pessimistic’ and instead automation will create as many jobs as it destroys.

It’s a view I share if we have the right policies in place for education of the new generation of the workforce and retraining the current, through to ethical deployment.

Interestingly retraining was an action McKinsey highlighted in its report ‘Skill shift: Automation and the future of the workforce’, released this spring. It highlighted that in order to manage technological change and maintain and grow the right skills, companies would have to retrain staff to perform different roles. Redeploying skills across the organisation, and hiring new skill was also essential.

But also on the list was contracting, because of the huge value instant experience and skill can bring to an organisation undergoing change. It can be used to bridge the gap in non-core, yet essential skill. And it can be used to plug resource problems for the less-skilled yet vital roles that need to be performed.

Drawing on over ten years of dealing with contractors, and combining it with all the research I have read, I believe the contracting market is pivotal to our country’s economic success and will continue to be so. Thanks to contractors, and more recently ‘giggers’, unemployment figures are at record lows. And Uber’s recent announcement to pay sick pay and parental leave will only boost this.

It therefore feels to me, and my fellow colleagues, as though the fourth industrial revolution is creating a perfect storm: Companies want and need expertise to deliver the major change programmes they are embarking on for which contractors are a perfect resource, companies want and need flexible but not necessarily highly skilled staff, which giggers provide, and people from across the skills spectrum want the work.

Harnessing this energy is what will make Britain the world leader in AI that the Government wants us to be. But it will also take policy that gives people the confidence to become a contractor without financial fear.

I say that, because the battle being waged by HMRC to target off-payroll working is misguided and will do great damage to the economy. It’s based on an ill-conceived notion that contractors do what they do to avoid paying tax.

But since introducing IR35 in 2000, which was designed to (and has) closed loop-holes, much has changed. And put simply contractors aren’t tax dodgers. They do it because they enjoy using their razor-sharp skills to solve tricky problems. They do it because they enjoy being part of agile teams that deliver industry-creating innovation. They do it because it’s a way to be there for their kids, or help a parent through illness. They risk financial security by being self-employed: they receive no holiday, sickness or redundancy pay.

And yet, despite being a backbone of our economy, contractors are constantly vilified by HMRC and targeted with clumsy policies. This must stop.

Actually what is needed is a review of income tax across the board and a consultation that assesses why employers (including HMRC themselves) need the contracting market and, frankly, why contractors are asking for some slack on the issue.

Recent headlines about judges overturning HMRC’s unlawful payment demands on contractors have made for unpleasant and unnecessary reading. I applaud the courage of those who have challenged HMRC and won. But I know for every contractor who successfully challenges HMRC, there are hundreds who have been bullied into submission. They’ve no doubt turned their back on contracting, eroding the agility of our economy.

But it needn’t be like this. As we debate the future of work we have a perfect opportunity to work together and assess how we want society to benefit and the policies that will help us all thrive. Failure to convert this chance and look at all aspects of how we live and work will undermine all ambition we have.

There is a place for our voice to be heard. This month HMRC have opened their consultation on ‘tackling non-compliance in the private sector’. That’s why I’m writing a cautionary letter to HMRC and to my MP: please don’t undermine the future success of our economy at these exciting and bountiful crossroads with these flawed short-term policies.

As I say, it’s a perfect storm. I urge everyone to respond to HMRC’s consultation: it’s time they listened.