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Spectre And The Mini Budget

By October 11, 2022October 28th, 2022No Comments

It’s a crisp October morning and Ian Spectre is in Westminster on his way to a meeting with the new Chancellor to give his views on the mini budget. “Edward Peters is going to have a field day with this” he muttered to himself as he arrived at the front door of number 11.

He was greeted by a non-descript young man who showed him into an office and brought him a cup of tea.  He looked around the room. There was a large framed photograph of the King. To the left was a statue of Plato and to the right a bust of Homer mounted on a marble plinth.

The door opened and in walked the Chancellor.

“Ian, good morning I’ve heard a lot about you and am so pleased to meet you, please call me KK”

“Good morning Chancellor” Spectre replied.  “I see you’ve been admiring my small collection” KK said “do you like classics?”

“I’m not really into music” Spectre replied ”Can we get down to business now and talk about the budget?”

“Yes, of course” KK replied “did you like it?”

“To be honest, no”.

“You’re obviously referring to the U-turn over the additional rate of tax” KK replied. “I had to do that to that to avoid a back bench rebellion”

“Yes, yes I know all that” Spectre replied “That’s not what I’m unhappy about”

“What then?” KK said feeling a little perplexed.

“It’s your fiddling about with IR35” Spectre said “This invention of mine goes back to 1999 and I tweaked it in 2017 and 2021 by bringing in the off-payrolling rules.  Huge numbers of self-employed workers providing services through limited companies were forced to pay PAYE instead”.

“But the off-payrolling rules were cumbersome and complex.  I want to cut red tape so that businesses can thrive.  I know that you head a department aimed at tackling abuse, but so far all you’ve done is target government departments and make them pay tens of millions of pounds in taxes.  The last Home Secretary was furious that you targeted the Home Office. If I hadn’t revoked this legislation it would have been HMRC and the Treasury next.

“I would never target HMRC or the Treasury” Spectre replied “they do important work and it is essential that they are allowed to recruit limited company contractors.  Besides that I provide my services through a limited company as do most of my team.  The taxes we collect from government departments just goes round in a circle.  The purpose of investigating government departments was to intimidate private sector organisations so that they don’t step out of line”.

KK paused and thought for a while.  “Look” he said “If these people are genuinely self-employed they should be able to provide services through limited companies.  I don’t want to intimidate businesses in the private sector, I want to relieve them from unnecessary regulations so that they can thrive.  IR35 remains in place of course and you remain free to tackle non-compliance by opening enquiries into individual tax payers in the same way as you have done for twenty years.  More importantly, I’ve costed this.  We believe there will be 100,000 workers who switch to using Limited companies in 2023/24 rising to 250,000 by 2026/27.  We have calculated a cost of £10,000 per person and for good measure we’ve budgeted a total cost of £1.1bn in 2023/24 rising to £2.6bn by 2026/27, so we’re being prudent”.

“But you’re assuming that these workers will use a contractor service organisation offering a one size fits all conveyor belt”.  Spectre continued  “for those the average tax saving may well be £10,000 per annum.  But many will go to accountants such as Edward Peters where they can get proper tax advice tailored to their own circumstances.  The savings they make could be more like £25,000 per annum on average.”

“Oh” said KK “I can’t go back on this now.  Do you have any ideas to help keep the costs under control?”

“Yes Chancellor” Spectre replied “Leave it to me, but please in future consult with me before making any changes to IR35”

The meeting ended and Spectre left number 11.  “Watch out Edward Peters” he muttered “this is only round one!”

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