One wonders if the Chancellor remembers the Brain Drain we once experienced. For certain, there are now lower taxed countries in the world that our IT and finance professionals could go to earn their money without paying quite so much tax.
Over the last 20 years the City of London has risen and risen in comparison with New York with the number IPO's in London constantly increasing and approaching the scale seen in New York. This is largely due to flexible labour markets and the fact that London has attracted some of the best professionals. The major financial instutions in London operate in volatile conditions and the use of freelancers allows them to adjust accordingly. The government's relentless pursuit of freelancers could really jeopardise that flexibility - or banish it abroad.
Of course, it's not just the City and the Financial Services industry - I merely used the City as one example of many. The flexibility that freelancers offer to business in general is valuable - and we cannot afford to lose it.
At the inception of IR35 there was a sharp intake of breath from accountants. But after the dust settled, accountants and freelancers found a way forward. One hopes it will be possible to find a way forward from the draconian Managed Service Companies (MSC) and Debt Transfer rules.
Perhaps one day we will have a Chancellor who appreciates the importance of flexible labour markets and who understands that suffocation by tax will only drive our talented professionals abroad.
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Antony J. Holdsworth & Co is a firm of Tax Advisors & Chartered Management Accountants that specialises in small owner managed businesses and IR35 freelancers. Visit us online at: www.antonyjholdsworth.co.uk
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