Tag: Jesse Norman

The statement made by Jesse Norman, the Financial Secretary to the Treasury, on 12 November 2020.

In line with the tax policy-making framework, the Government consulted on a number of tax policies announced at spring Budget 2020. Today, the Government are publishing responses to some of the consultations that were extended due to covid-19, alongside draft legislation which will need to be introduced.

The Government are also publishing responses to calls for evidence in the market for tax advice, as well as a consultation on making tax digital for corporation tax.

Finally, the Government are making some tax policy announcements for tobacco and vehicle excise duties, measures to tackle promoters of tax avoidance, a small change to off-payroll legislation, and delays to other measures and reviews.

Previously announced publications

The Government are publishing a summary of responses and draft legislation for each of the following measures, as announced at the spring Budget:

Plastic packaging tax

Tackling construction industry scheme abuse

R&D SME tax credit PAYE cap

Tax implications of the withdrawal of the London inter-bank offered rate (LIBOR)

Hybrid and other mismatches

The Government had extended the policy consultation response deadlines for these measures in April, in response to the covid-19 outbreak.

Draft legislation is accompanied by a tax information and impact note (TIIN), an explanatory note (EN) and, where applicable, a summary of responses to consultation document. All publications can be found on the gov.uk website. The Government’s tax consultation tracker has also been updated.

Raising standards for tax advice

The Government are publishing a summary of responses and next steps from the call for evidence on raising standards in the market for tax advice. As a first step towards raising standards, the Government will consult on requiring tax advisers to hold professional indemnity insurance and how to define tax advice. The majority of respondents supported Government action to raise standards.

Tackling promoters of tax avoidance

In line with the Government’s strategy to tackle promoters of tax avoidance schemes, published in March, the Government are today announcing that they will consult in the new year on further measures to tackle promoters. These proposals will build on the proposals announced earlier this year and will:

disrupt the business model of offshore promoters by making it harder for such promoters to access the UK by making their onshore partners equally responsible for the anti-avoidance regime penalties that the offshore promoter generates.

directly tackle the secrecy on which promoters rely; the proposals here would ensure that taxpayers are fully informed of the reality of what is being sold to them.​

disrupt the economics of tax avoidance by ensuring that, without delay, promoters face financial consequences for continuing to promote tax avoidance so that promoters cannot continue to profit from avoidance while HMRC investigates them.

give HMRC additional powers to act against companies that continue to promote schemes and who sidestep the rules designed to restrict their activities. The proposals would see such promoters shut down and restricted from setting up similar businesses.

The Government continue to recognise that the many tax advisers who adhere to high professional standards are an important source of support for taxpayers. The proposals are aimed at targeting those promoters who exploit every opportunity to personally profit by sidestepping the rules and whose unscrupulous actions often leave taxpayers with significant tax bills.

The Government continue to recognise that strengthening HMRC powers in the way described must be done in a carefully constrained way. HMRC will again work with stakeholders, and in particular those tax advisers who adhere to high professional standards, to ensure that these proposals are both effective and proportionate.

Making tax digital for corporation tax

The Government are publishing a consultation on the design of making tax digital for corporation tax, as announced on 21 July. This will allow stakeholders to inform the early stage design of making tax digital for corporation tax and to provide businesses with time to prepare.

Further policy announcements:

The Government have made a number of further policy decisions which are being announced today, relating to:

Extending the annual investment allowance provisional £1 million cap

The Government are today announcing a year-long extension to the temporary increase of the annual investment allowance (AIA). The AIA provides firms 100% same year tax relief on qualifying capital expenditure, up to a fixed limit. Instead of allowing the AIA to revert to £200,000 from 1 January 2021, the Government are extending the temporary £1 million cap set at Budget 2018 until 31 December 2021. This announcement:

Responds to the needs of business, giving enhanced tax relief on plant and machinery expenditure;

Provides businesses with upfront support during continuing covid-related uncertainty;

Simplifies taxes for the 99% of businesses investing up to £1 million on plant and machinery assets each year.

Tobacco duty uprating

The Government are announcing the uprating of tobacco duties to protect the public finances, continue the drive to reduce smoking prevalence, and support the Government’s target for a smoke-free England by 2030. In line with the existing escalator, duty rates on all tobacco products will increase by RPI + 2%. In order to narrow the gap between hand-rolling tobacco (HRT) and cigarette duty rates and ensure the Minimum Excise Tax (MET) continues to be effective in the current market, HRT will increase by RPI + 6% and the MET by RPI + 4%. The Treasury is laying an order before the House to enact these changes, which will take effect on 16 November.​
Van vehicle excise duty

The Government will not now introduce a new graduated system of vehicle excise duty for light goods vehicles or motorhomes from April 2021, to avoid distracting the automotive sector and businesses more widely from the challenges they currently face in light of the covid-19 pandemic. Motorhomes will continue to be placed in the private/light goods class.

Off-payroll working—technical change to ensure legislation operates as intended

A technical change to the off-payroll working rules will be made in the next Finance Bill. This will ensure the legislation operates as intended from 6 April 2021 for engagements where an intermediary is a company. The change will correct an unintended widening of the definition of an intermediary, which went beyond the intended scope of the policy.

Notification of uncertain tax treatment by large businesses

The Government are announcing the implementation of the new requirement for large businesses to notify HMRC of uncertain tax treatments will be delayed until April 2022. This will allow more time to get the policy and legislation right following the recent consultation, including through further engagement with stakeholders, and will give affected businesses more time to prepare for the change.

Timely tax payments and review of tax administration framework

On 21 July, the Government committed to publishing calls for evidence on timely tax payments and a review of the tax administration framework. Given the continued pressures of the covid-19 outbreak, and with other consultations in progress, the Government will now publish these documents in spring 2021.

Soft drinks industry levy (SDIL) milk review

In 2017, the Government made a commitment to review the exemption for sugary milk and milk-substitute drinks from the soft drinks industry levy (SDIL) by 2020. The Government have been clear that if industry does not make enough progress on voluntarily reformulating these drinks, the Government may extend the SDIL to include them. In light of Public Health England’s latest reformulation report (published earlier this month) that shows good progress has been made in sugar reduction of milk-based drinks, the Government will next consider the exemption for sugary milk and milk-substitute drinks in 2022 after the full reformulation programme completes.

The comments made by Jesse Norman, the Financial Secretary to the Treasury, on 12 November 2020.

It is vital that we support business through the difficult months ahead.

Extending the Annual Investment Allowance’s £1 million cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy too.

The speech made by Jesse Norman, the Financial Secretary to the Treasury, on 20 August 2020. Spelling errors issued in Treasury text corrected, but confused wording left in.

Introduction

Thank you very much indeed, Frank and I also thank Anita, Daniel and all of your team and the team that set up this amazing event. I have to say when you told me it was three days of online streaming and dozens of speakers and thousands of watchers, I thought this was nothing less than the Glastonbury of tax. I congratulate you on pulling that off. I think it’s an extraordinary achievement.

Of course I am not really surprised, that this conference is going ahead, because the tax community is always ready, willing and able to embrace digitisation, and I’m going to come on to that a little later in my remarks.

Frank, you’ve done that very brilliant chairman thing of roping in fifteen different topics that I’m going to talk to you about, and I’m happy to take questions any [sic] of those in questions, but the three areas I’m going to focus on are:

HMRC’s response to Covid-19 and the pandemic

the core question of how HMRC focusses on its main business – that is collecting tax

and then, something I care very deeply about, and I’m thrilled that we have been able to make massive progress on in

the last few months, which is the 10 year plan we’ve for HMRC to create a trusted, modern tax administration system

Let me start by saying that, of course I am absolutely proud of what HMRC has done in relation to Covid. I think it’s been an astonishing set of outcomes for them. But I also think that HMRC, and it’s one of the lessons we’ve learnt is this, can’t operate in a vacuum. It needs trusted stakeholders, it needs a tax system that’s working, it needs many, many organisations and people around it to be as effective as it is and would like to be.

The ICAEW make an enormous difference, and its members too. So whether they are identifying areas for improvement, or helping us to consult, or improve schemes – thank you, and thank you ICAEW members very much indeed.

I should also say, that we are coming to this, as you will appreciate, in a very specific economic context, certainly unlike any other in recent experience. We’ve now formally entered recession for the first time in eleven years. This is a highly unwelcome development although, alas, not surprising given the wider situation.

The Chancellor has made perfectly clear his view that there will be hard times ahead, and last week’s figures confirm the truth of that statement.

And of course, it’s true that hundreds of thousands of people have already lost their jobs, despite the incredibly valid efforts that HMRC and my Treasury officials have been engaged in, trying to protect the economy and protect businesses and protect employment.

It’s sobering to reflect that many more people will almost certainly face redundancy or unemployment in the next few months.

Having said that, I do think the work HMRC does can play an absolutely vital role in trying to mitigate the damage the pandemic is doing, and HMRC is at the centre of this activity too, as we’re going to discuss.

You will appreciate that none of our public services will be doable if it wasn’t for the funding that comes through tax revenue, and that’s of course the core of HMRC’s responsibilities.

HMRC at the forefront

You don’t often hear HMRC ministers talking about them being at the forefront of delivering huge and successful new programmes, in record time and at the centre of the government’s response to a crisis, but that is what HMRC has done. As I say, I think it’s a tremendous achievement.

Let me say also, we are acutely aware that by no means every aspect of every scheme is perfect. This process has been done at a blistering pace. We have been pulling together schemes as quickly as we can, and officials have been working around the clock to make sure that we deliver programmes that deliver the maximum good for the maximum number of people as quickly as possible, with the minimum of fraud.

It might be worth just touching briefly on the results. The furlough scheme so far has helped 1.2 million employers claim just under £36 billion. HMRC also helped around 2.7 million self-employed people claim nearly £8 billion in grants, and helped employers by reimbursing some of the costs of statutory sick pay for COVID-related absences.

In the case of Eat Out to Help Out, some 85,000 restaurants have now registered and the total amount claimed is £180 million, from 35 million covers claimed.

So these are huge numbers, and to put that all in place at such speed is a considerable achievement.

What I think is less noticed, but to me at least, and to you as tax connoisseurs, no less important, is that HMRC has also implemented more than 60 policy changes and easements, and they include things like:

the deferral of tax payments through the VAT system and deferral of Income Tax Self-Assessment payments due in July 2020

introducing a temporary relief for customs duty and import VAT on PPE and other medical supplies used to help combat Covid-19

assisting in the production of millions of additional litres of alcohol hand sanitiser. HMRC set up a specialist team who moved very quickly to increase production of denatured (undrinkable) alcohol which has proved very important in fighting the virus

It’s very interesting how brewers and distillers have also moved very quickly into that market and have created new markets for themselves. I’m not going to pass by this issue without singling out the Black Mountain Botanicals distillery in my constituency – who have done exactly that to great effect.

So that’s the wider context, but of course that in itself, raises the question of where do we go from here. Is there going to be a ‘new normal’ for HMRC, and what does that new normal look like? For HMRC that does mean a refocussing and a reconsideration of the key principles by which they operate, again focussing wherever possible on supporting individuals, supporting businesses, protecting the taxpayer and ensuring the money comes in to fund public services.

Where we go from here

So what are those key principles?

The first one will be that HMRC will continue to collect the tax due, but do so, as far as possible, in a way which supports taxpayers in the work they are doing and in particular, supports businesses that are supporting their employees. We want businesses to be doing the right thing and we want to do everything we can to support them in the way they do that.

HMRC should communicate transparently and openly. That is very important. The consent on which a tax authority exists, and the consent of the wider tax system requires open and transparent communication.

It’s of course always vital, for similar reasons, that HMRC should continue to be professional, fair and even-handed in their dealings with taxpayers.

Where HMRC introduced temporary arrangements that have improved taxpayers’ experiences or created operational improvements, they need to, where possible, to build on these changes to deliver long-term sustainable solutions.

Finally, HMRC must continue to collect the money that pays for the UK’s public services, and that means continuing to prioritise tackling serious fraud and criminal attacks on the tax system, while making it as easy as it can be for individuals and businesses pay [sic] the right tax at the right time, without difficulty.

So those principles really remain unchanged, but I think extended in some key areas. Let’s talk a little bit about how that might work.

Of course, HMRC will still issue penalty notices, they should take a sympathetic approach to those who are struggling to pay their tax or file their returns. HMRC will accept the impacts of COVID-19 as a reasonable excuse, if properly evidenced, and will offer longer periods to request a review or appeal a decision.

Similarly, HMRC has restarted debt collection activities and it’s absolutely right that it should do so. Of course they recognise, and I recognise that some individuals and businesses remain in uncertain financial circumstances.

So HMRC will initially focus on collecting debts from taxpayers who are least affected by COVID-19 and most able pay [sic] their tax debts. Having said [sic] if you or any of your members’ clients have concerns about their ability to meet tax obligations, to get in touch with HMRC now, to see how they can be supported through deferrals or Time to Pay or any of the other measures that we’ve introduced to make sure they have adopted every measure to which they are entitled.

So that is the full picture, but that in itself yields to consideration of what the future will bring, and there you get into the issue of HMRC’s 10-year strategy and all the work we’ve been doing on the tax administration system.

HMRC’s 10 Year Strategy

You and your members will have seen that last month we published the 10 year Tax Administration Strategy. I am delighted about that, it is fantastic to be able to put a 10 year process out there, so people have a proper sense of the direction in which we’re heading and can plan accordingly. Software providers can, I hope, flood into the market with new databases, platforms and apps which assist people to pay tax effectively and have the best possible interaction with the tax system.

That whole plan, as your members will know, having probably read it and costed it closely, is a strategy of focus and collaborative improvement. I think has the potential to yield huge benefits. If you read it, you will see that collecting tax, while an important function, is by no means the only aspect of that plan. It’s also very important to support HMRC’s ability to act to improve our national resilience. It’s been able to do that with the furlough scheme, and that’s surely a very important function for it evolving over time.

I also think the process of nudging people into digitisation isn’t just good for them, and many people have voluntarily adopted MTD for VAT already, but also has a tremendous potential productivity benefit for the economy as a whole. We have a long tail of businesses in the UK which are quite low on productivity, so this has a much wider potential economic benefit.

So those three areas, tax, resilience and productivity are all at the centre of this plan. What does this involve? Well it means greater flexibly [sic], resilience and responsiveness in the tax system. It means improvements to businesses’ digital skills, and it means a series of measures focussed on reforming the tax administration in a way that reflects the modern economy, so that it is working in real time, it is allowing people and businesses to pay the right tax, without tax becoming a burden or too intrusive or difficult. And of course, it does enable the government to continue to support the economy and businesses and individuals at times of crisis.

So that does that mean in practice [sic]. In the first case, it means extend Making Tax Digital (MTD) and pressing on with digitisation as they have done in countries like Denmark, Finland, New Zealand, Australia and many others. That’s very important.

Having successfully introduced a new, digital VAT service for business we will be:

– extending MTD for VAT to VAT-registered businesses with turnover below the £85,000 VAT threshold from April 2022

– introducing MTD for Income Tax Self Assessment for businesses and landlords with business and property income over £10,000 from April 2023

– consulting on the detail of MTD for Corporation Tax in Autumn 2020

So we are giving businesses, individuals and the software industry a long lead-in time to ensure people have time to prepare for this change. And for Income Tax Self Assessment taxpayers we’ll have the threshold so that those earning under that sum can opt out if they wish, though one of the fascinating things has been that many businesses have chosen to opt in to MTD despite not being covered by it as they fall below the threshold.

We think this is the start of a really interesting process as we continue to embrace technology,

And what do we want to see from that? Well we obviously want to see greater use of real-time information. That’s a vital component – it’s currently very hard for the taxpayer to have an immediate picture in real time of tax liabilities. It’s a big change, but it does help the government. Let’s be clear that if we had a more up to date picture of taxpayers’ financial positions would have enabled SEISS support to be better targeted for those who needed it. Quarterly reports submitted before the introduction of SEISS would have given us almost a further full year’s data, and this would have enabled us to pay SEISS grants based on self-employed workers most recent trading levels. There will be a very concrete improvements [sic] to people’s lives and the resilience of their businesses coming out of these potential changes.

We also want to explore options for timely payment of taxes, and I realise different sectors face different challenges in this regard. The delays in the UK system can make it hard for people to manage cashflow, particularly for the newly self-employed, whose first tax bill could be up to 22 months after they start trading. We want to open a debate, a wider discussion, about the pros and cons of bringing tax payment more into line with the increasingly real-time nature of tax reporting and other taxpayer services. Of course that also has the effect of helping people to avoid a cashflow crisis at their end and stops them falling into debt, so that has some benefit. We also want to push ahead towards a secure, easily accessible single digital account. We want taxpayers to have one complete financial picture which draws on different sources of information and enables HMRC to provide a more tailored service to their needs.

Alongside that, but very importantly for the ICAEW and your members, we want HMRC to improve services for agents / representatives, who we regard as an integral part of the wider tax system, and we want to support them and help them do what they can to support their clients, and of course we want to raise standards in that area.

And the final thing, the bit that often gets forgotten. I know none of this is big box office in political terms…but even in this bit, the thing which tends to get forgotten the importance of modernising the Tax Administration Framework. Our current framework is somewhat complex and somewhat out of date. It needs to be simplified and it needs to be brought up to date. And the goal of that is to allow HMRC and taxpayers to benefit from advances in the use of technology and data, for example by simplifying processes so that businesses need only register once with HMRC for all taxes, and to stop this current system where people have to go around navigating different rules, processes and deadlines for different taxes, and having to sign up with the tax authority on several occasions.

Wrapping up

So this, taken together, is I think quite a significant and important moment. Actually, I think it’s important for the country, not just the tax work. I think it forms a coherent package of change, and a long term package of change.

Therefore I am very excited about it.

I want to reiterate my sincere thanks to the ICAEW for their collaboration already – both with officials and with me personally – in taking this strategy forward. I am absolutely committed to working very closely with you and with the industry and agents tax profession to understand and improve the tax administration system over the next few years.

I am now very happy to take questions and thank you everyone again for inviting me to this conference.

Below is the text of the statement made by Jesse Norman, the Financial Secretary to the Treasury, in the House of Commons on 15 June 2020.

Before I start, may I join with all the words that have been said in praise of Jo Cox during the proceedings so far? I know that many more such words will be said today. One thing that colleagues may not know, amid all the many things that they have been told about her, is that she was very fond of visiting Symonds Yat in my constituency in Herefordshire. I look forward to the day when many other people can do that, following lockdown.

From the onset of this pandemic, the Government’s top priority has been to protect the NHS and to save lives, but we have also made it clear that we will do whatever is needed to support people, jobs and businesses through the present period of disruption, and that is what we have done. On Friday, the Office for National Statistics published its first estimate of April GDP and showed the economy contracting sharply by a record 20.4% on the month. It is clear that restrictions introduced during the lockdown, while necessary, have had a severe impact on output.

However, it is important to note that the OECD, the Office for Budget Responsibility and other external forecasters have all highlighted that the cost to the economy would have been significantly higher were it not for the swift and decisive action that the Government have taken. Measures such as the coronavirus job retention scheme—the CJRS—which has protected almost 9 million jobs and more than 1 million businesses, have helped to limit the adverse impact of the crisis. It is also important to note that the OECD forecast the UK to have the strongest recovery of all the large countries that it looked at, with an unemployment rate projected to be lower than that in France and Italy by the end of 2021.

As we are reopening the economy, the Government are supporting putting people back into work. Last month, my right hon. Friend the Chancellor announced that the CJRS would be extended for four months, until the end of October. From July to October, employers currently using the scheme will be able to bring furloughed employees back part-time. That will ensure that the CJRS will continue to support all firms so that no employer faces a cliff edge.

This remains a very uncertain and worrying time for businesses and employees alike. The Government have set out separately the five principles that must be satisfied before we make further changes to the lockdown rules, which we based on advice received from Scientific Advisory Group for Emergencies. However, I can assure the House that the thoughts, energies and resources of the Government are focused increasingly on planning for the recovery. We will develop new measures to grow our economy, to back businesses and to boost skills. I am confident that the United Kingdom can continue to thrive in a post-covid world.

Below is the text of the statement made by Jesse Norman, the Financial Secretary to the Treasury, in the House of Commons on 19 May 2020.

I beg to move,

That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision taking effect in a future year may be made amending Chapters 8 and 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003.

This ways and means motion enables the Government to amend the current Finance Bill in order to implement reforms to the existing off-payroll working rules. We are presenting it separately because we wanted to extend the date at which it comes into force by one year to April 2021 in recognition of the effects of the coronavirus pandemic. The off-payroll working rules have been in place for 20 years. They are designed to ensure that people working like employees but through their own companies pay broadly the same income tax and national insurance contributions as people who are directly employed.

In April 2017, the Government reformed the way in which the rules operate in the public sector by transferring the responsibility for determining whether the rules apply from individual contractors to the public bodies that engage them. Unfortunately, in the private sector, non-compliance with these rules remains widespread, and it is forecast to cost the Exchequer over £1.3 billion a year by 2023-24 if not addressed. This is not a sustainable position. It costs the taxpayer a great deal of revenue that is needed for our public services, it perpetuates an unfairness between individuals working in the same way but paying different levels of tax, and it prolongs the disparity with the public sector, where the rules have been in place now for three years.

At Budget 2018, the Government announced that the reform would be extended to medium and large-sized organisations in the private and voluntary sectors, but it would not apply to engagements with the 1.5 million smallest businesses. It is important to be clear that this is not a new tax. The off-payroll working rules have been on the statute book since 2000. This reform is focused on improving on improving compliance with the rules that are already in place.

Let me turn to the amendment tabled by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) the hon. Member for Haltemprice and Howden. I understand that it will not be moved today, but it is important to be clear about the Government’s position on it. To help businesses and individuals deal with the economic impacts of the coronavirus, on 17 March the Government announced that the reform to the off-payroll working rules would be delayed by one year from 6 April 2020 until 6 April 2021. The amendment would delay the introduction of reform by a further two years to April 2023, but it is hard to see any genuine rationale for this further delay.

The current measure was first introduced at Budget 2018. Since then, the Government have carried out two consultations on the detail of the reform. Her Majesty’s Revenue and Customs has worked extensively to support businesses in preparing for the change. Draft legislation and guidance has been published. There was a further review earlier this year that resulted in several additional ​improvements. By delaying until 2021, the Government have already ensured that businesses and contractors will not need to make final preparations for this reform until next year. There is therefore no need for further delay. Moreover, such a delay would have very significant drawbacks. It would not address the intrinsic unfairness of taxing two people differently for the same work, it would extend the disparity between the private and public sectors, and it would come at a significant fiscal cost that other taxpayers up and down the country would have to make up.

I turn now to the substance of the measure. I want to address a number of further concerns that have been pressed by colleagues, including, in particular, my hon. Friends the Members for North East Bedfordshire (Richard Fuller), for Barrow and Furness (Simon Fell), for Workington (Mark Jenkinson) and for Watford (Dean Russell). The first of these is that organisations will no longer engage with personal service companies as a result of this reform, reducing the number of contracts available in the labour market. It is important to recognise that the Government are fully aware of the importance of the flexibility for individuals and businesses to agree working arrangements that suit their needs. We know that that has been one of the pillars of the success of the UK labour market in recent years.

In 2017, soon after the implementation of the public sector off-payroll working reform, the Government commissioned independent research to assess its effect on the labour market. It found that the Government and independent researchers had not seen any evidence of an overall change in the demand for the services and skills of contractors.

Some organisations have clearly decided to change the balance of their employees and their contractors. That can be for many reasons—for example, where that better suits the evolving business model of that organisation—but many organisations will still choose to engage contractors using personal service companies where that is appropriate to their business.

Nevertheless, the Government remain keen to ensure the long-term flexibility and success of the labour market. We will therefore use the additional time given by this one-year delay to commission further independent and robust research into the long-term effects of the 2017 reform on the public sector. We want that research to be available before the reform comes into effect in other sectors in April 2021, and I can tell the House that the Government will give careful consideration to the results of that further research and thereafter will continue to monitor the effect of the reform on the labour markets of those sectors, including by commissioning independent research six months after this private and voluntary sector reform has taken effect.

Secondly, colleagues have concerns that organisations might take a blanket approach to status determinations, categorising all engagements as employment, regardless of the facts. The Government have been very clear that determinations must be based on an individual’s contractual terms and actual working arrangements. Many businesses and public sector organisations have described processes that they have put in place to ensure that determinations are correct, based on the actual working practices of the individuals concerned. There is a vigorous contractor ​lobby, which has also shown itself willing and able to highlight cases where it feels that the rules are not being followed. The reforms themselves include a client-led status disagreement process, where contractors can lodge a complaint if they disagree with how they have been categorised.

Thirdly, HMRC is continuing to help businesses to get their employment status determinations right by ensuring that they have access to a wide programme of education and support. The independent research that we are announcing post-implementation next year will also evaluate from an external perspective whether decisions are being made properly.

Finally, HMRC has committed to a light-touch approach to penalties in the first year of the reform and has stated in terms that the reform will not result in new compliance checks being opened into previous tax years unless there is reason to suppose or suspect fraud or criminal behaviour, and the same is true for penalties for inaccuracies.

The Government very much value the important role that contractors play in the labour market and want businesses to be able to design their workforces in a way that makes sense for them. That should not mean, however, that contractors pay less tax than employees where their engagement meets the test of an employment relationship. The legislation is designed to remedy that unfairness and to support the tax base needed to fund our public services, and I commend it to the House.