Written evidence submitted by Manda Pillay-Maloney
o What are the major long-term pressures on the tax system in the UK, including those arising from changes in working practices, demographics, the environment and other factors? How are these affecting the efficiency of the tax base and the overall level of demand for public services?
People are in fear of losing their jobs. Many are working longer hours while stationed at home due to the pandemic. They are also incurring work from home costs such as internet, new office chairs and desks etc. It should be clear to the Employer /employee how and when these costs can be reimbursed.
Further the Furlough scheme was designed to save British jobs but many people in a variety of industries and sectors have been or are about to be made redundant.
These individuals need clear facts on what their redundancy entitlement is and how the sum is taxed.
From a legal perspective it needs to be clear what the definition is of redundancy so employers do not use the definition as a tool to downgrade an existing job - claiming this downgraded job to be the ‘new job’ and thus forcing the staff member to take a pay cut for doing a job that they had previously done albeit with a slightly different name.
It may be time to introduce some ‘work from home’ legislation/ regulations – covering work from home expenses and clarifying work related travel arrangements.
In addition, Employment Law should be considered to ensure to an extent that employees’ working from home are not breaching the The Working Time Regulations 1998 or being forced to opt out of this regulation. Thereby causing the employee to rack up ridiculous hours at work to the detriment of the staff members health. Their prolonged sickness from stress etc. will be a drain on the Department of Work and pensions as well as the NHS if the staff member is no longer fit for work.
o What more can the UK do to protect its tax base from erosion as a result of globalisation and technological change, and what further impacts will the coronavirus pandemic have on our tax base?
Maintenance of a constant tax base around 17 – 20% as well as beneficial terms to an investor company. Favourable R and D reliefs particularly if the service is occurring in the U.K. as this will result in employees paying tax and N.I.
The UK should be wary of certain companies such as Huawei, who prefer to promote from China as opposed to the U.K. Their policy is to get a U.K. employee to train a Chinese employee and the later relocates back to China.
This results in any intellectual property and future revenue streams arising in China.
o What reforms should be considered in response to the pressures on the tax system?
The office mentality is changing, people will be working from home and many consultants during the pandemic will be left to their own devices as to how and when they undertake their work. Is it therefore time we reconsider the off-payroll working rules (IR35).
This is the time where the Government needs brave and visionary.
We do not want to go down the road that focuses on closing loopholes and measures that solely increase the tax take. This I believe will increase in complexity of the tax system. An increase in the complexity in the tax system and measures that increase the tax take will stifle microbusinesses as well as inward investments. An obvious example is MTD on small and micro-businesses which increases costs with no benefit for the business itself.
A bigger view needs to be taken to look at the tax system ad how this should be changed to encourage the growth of micro/small businesses and encourage inward investment. A wider economic impact has to be considered. No economy means no tax.