Budget Reactions from the HR World

We’ll update this as we receive more feedback, but here’s what you are telling us so far:

osborne

Lee Biggins, founder and managing director of CV-Library comments:

“The long-term focus of today’s Budget instils little hope overall – the OBR has been forced to cut targets and even these new goals rely on Britain staying in the EU. With the UK currently facing economic uncertainty, and the likelihood of a Brexit increasing, today’s Budget leaves the nation with more questions than answers. Luckily the chancellor did reveal some good news for small businesses, particularly in the north.

The reforms to business rates will bring some relief to small businesses, especially given the financial burden the National Living Wage is placing on SMEs next month. Levelling the playing field against corporations will allow small businesses to more effectively plan for growth and continued job creation, which is crucial to the UK labour market.

“It’s also reassuring to see progress being made toward devolution in support of the Northern Powerhouse. Despite this, more needs to be done to support local communities as our latest data shows that wage growth in the north is nominal at 1.8%, lagging behind the national average of 2.5%, suggesting that local businesses cannot afford to attract qualified workers.

“Unfortunately the overall focus on long-term growth in the Budget, combined with news that parliament has not achieved targets, leaves many asking for more immediate support from the government.”

Samantha Hurley, Head of External Affairs at the Association of Professional Staffing Companies (APSCo), comments:

“HM Treasury has today announced that there is to be a new duty on the public sector to ensure workers who are engaged through a PSC pay the right tax. While we support this in principle, HM Treasury has also said in the small print that when recruitment firms are involved, they will be deemed responsible for assessing employment status for tax purposes and consequently liable for the payment of taxes.”

“This is clearly unjust, because determining someone’s tax liability is highly complex.  The IR35 tax rule, which governs the tax paid by PSCs, is not a simple test and requires detailed understanding of many aspects of a worker’s relationship with the client, and of a PSC’s day to day operations.  But recruitment firms simply do not have sight of the reality of the working relationship.  It is, therefore, entirely unreasonable to expect them to make this decision, and be financially liable for it.”

“Deeming provisions in tax law have been challenged repeatedly in the courts, and clearly there is a huge principle of fairness that should apply to all tax payers, including recruitment firms.  The proposals seem to totally contradict recent government reviews. The Office of Tax Simplification has just conducted a review of small company taxation and is also undertaking a cross departmental review of tax and benefits relating to freelancers.  Additionally, Julie Deane, CEO of the Cambridge Satchel Company, recently completed an independent review of self-employment for the government. Yet none of these reviews were mentioned today.”

“I believe that few, if any, recruitment firms will be willing to take on this type of liability.  This will stop the vast majority of PSCs from providing services to the public sector, significantly impacting its ability to access the specialist skills it so badly needs.”

“The only light is that the proposal is not due to take effect until 2017 and HMRC has announced that it will enter into a consultation process in the meantime.”

“APSCo will consequently vigorously fight this unreasonable proposal on behalf of its members, and will be asking the Government to publish its assessment of the impact this will have on the delivery of public services, because I find it hard to believe they’ve properly assessed the effects.”

Author: Editorial Team

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