1. OXFORD LAW
CIOT and IFS Debate: How should different ways of working be taxed?
Judith Freedman, Pinsent Masons Professor of Tax Law, Oxford University and Oxford Centre for Business Taxation

2. Integrating tax, employment law and social security
Holistic review necessary
But answer may not be the same?
Now
Single definition of employed/self-employed in case law (though heavily fact dependent, so in practice variations)
Statutory variations eg NICs exceptions
Special tax cases eg IR35 and construction industry scheme
Labour law – worker category in addition

3. Aims and objectives – labour law
Protection of those in unequal bargaining position
State imposes obligations on employers/engagers through statute
Efficient organisation of protection provision (e.g. insurance arrangements).
Relationship is between engager and engaged – mediated by state.

4. Aims and objectives – tax law
Income tax-using efficient administrative mechanism to reduce costs, evasion and avoidance (PAYE)
Income tax- providing incentives to work in a particular way
Does the market provide the incentive?
If not how should it be targeted? Eg R&D
Targeting to legal form does not relate to any particular market failure.
Relationship is between taxpayer and state-but with engager as tax collector
VAT – transaction tax. Legal form relevant mainly because of threshold.

5. Aims and objectives- social security law
Relationship between individual and state
Partially same regardless of status eg state pension (now)
Some differences in relationship with state eg maternity/paternity leave and Jobseekers Allowance, redundancy payments (now being examined- reduce differences as in other countries)
Workers have slightly different rights but NICs may often be same as employees
Other issues raised in debate eg sick pay- responsibility of employer; inability to get mortgages- market issue not for tax or social security to solve.

6. Workers (from UK.Gov website)
Workers usually entitled to
the National Minimum Wage
protection against unlawful deductions from wages
the statutory minimum level of paid holiday
the statutory minimum length of rest breaks
to not work more than 48 hours on average per week or to opt out of this right if they choose
protection against unlawful discrimination
protection for ‘whistleblowing’ - reporting wrongdoing in the workplace
to not be treated less favourably if they work part-time
They may also be entitled to:
Statutory Sick Pay Statutory Maternity Pay
Statutory Paternity Pay Statutory Adoption Pay
Shared Parental Pay
Workers usually aren’t entitled to:
minimum notice periods if their employment will be ending, for example if an employer is dismissing them
protection against unfair dismissal
the right to request flexible working
time off for emergencies
Statutory Redundancy Pay
Workers usually aren’t entitled to:
minimum notice periods if their employment will be ending, for example if an employer is dismissing them
protection against unfair dismissal
the right to request flexible working
time off for emergencies
Statutory Redundancy Pay
Someone is likely to be a worker if most of these apply:
they occasionally do work for a specific business
the business doesn’t have to offer them work and they don’t have to accept it - they only work when they want to
their contract with the business uses terms like ‘casual’, ‘freelance’, ‘zero hours’, ‘as required’ or something similar
they had to agree with the business’s terms and conditions to get work - either verbally or in writing
they are under the supervision or control of a manager or director
they can’t send someone else to do their work
the business deducts tax and National Insurance contributions from their wages
the business provides materials, tools or equipment they need to do the work

7. Comment on previous slide above-
Not simple- note words in blue (my blue). Much uncertainty
Payment of tax and National Insurance is described as an indicator of classification rather than a consequence- confusing.
How does this help engager or engaged to know rights?

8. Thoughts for discussion
Gig economy presents no new issues but highlights problems.
Detach withholding obligation from employment definition.
Use technology to achieve the aims of tax law by providing a platform for withholding so that income tax no longer distorts employment law so greatly
Align social security rights further
Reduce VAT threshold (perhaps made easier by Making Tax Digital programme and technology).