It is hard to be honest on self-employment: why tax must be enforced for gig workers

Applied Business Solutions and the government promote a false market. Is it time to act? It is little surprising that poor day-to-day compliance with the rules of employment may not be a problem that…

It is hard to be honest on self-employment: why tax must be enforced for gig workers

Applied Business Solutions and the government promote a false market. Is it time to act?

It is little surprising that poor day-to-day compliance with the rules of employment may not be a problem that many workers really care about. Who has the time or the willpower to check the parliamentary form to ensure they have not added a corporation rather than a self-employed company to their employers list?

Yet the fact that more people are therefore being tempted to register in this way means they risk falling foul of employment law – which may mean penalties, backdated pay and a strike off for those considered to be using their name for commercial purposes.

It is well-known that many social enterprises struggle with how to scale their business and still fit into the tax-based, reporting frameworks, all which mean smaller enterprises are often left with one choice to fill their statutory tax reporting requirements: to hire staff or to contract out that task.

Enter Digital Gigs – an online platform that takes all the hassle out of ‘gig’ work

Set up by A2Z Digital Solutions, it has become a popular choice for struggling small businesses, for whom there is a steady stream of work or staffing needs coming in to manage from their own business.

Its mantra is simple: “We are happy to take this extra work as it fits into your business model, its time horizon and it is actionable.”

Digital Gigs has operated on a self-employed basis, servicing Britain’s biggest companies like TalkTalk and Tesco.

But there is a problem. According to the Revenue & Customs, its customers are not self-employed.

Labour has now written to HMRC asking for answers to several questions around this contract. But it’s not just Labour that has concerns about this contract.

It is true that e-gigs start off as labour-costless, outsourced work to lowest-cost operators. But once the services offered are potentially subject to the tax and national insurance schemes of this country, it raises serious questions around whether there is a true self-employed person on the side.

It all comes down to the exact nature of the service offered. It is true that many self-employed people choose to work “untaxed” – this is allowed under the self-employed status by law. In reality, many of them are now real employees – they actually earn an income and are self-employed in another way.

But digital ‘gig’ work is a very different service. Some of the work is considered so short-term that many companies are uncomfortable with the idea of it being classed as a tax-free activity.

It is also precisely the sort of activity that you would expect to attract a tax-paying employee.

Yet it seems that Digital Gigs continues to get away with pretending to be self-employed as long as it is not directly linked to the payment of tax.

The Revenue needs to draw a clear line here. Companies need to be honest with their clients about the fact that as a statutory enterprise, Digital Gigs must comply with all the tax and national insurance requirements of the company it is working for.

New research for the Pink Tape Group indicates that there are around 27,000 digital ‘gig’ workers in Britain – these are the people who currently find themselves working on behalf of “gig economy” companies such as Uber and Deliveroo, and others, who have lost their employment rights.

While they might think that they are being “honest” with the public about the fact that they are self-employed, perhaps it is more time-consuming and time-poor for them and their managers to deal with the complex and ever-evolving employment rights and tax demands of the modern economy.

As the research suggests, this is a deep-rooted problem that is a blight on modern business. While there is an argument for government to build a new mechanism to collect data on gig work, there is also an argument that this information might be aggregated and made available for a simpler, easier audit in future.

Those who already get too little tax out of gig work need to start taking a harder line. If I was the chief executive of a public company that was made aware that their employees had been “gigged”, I would be doing everything I could to investigate what was going on and ensure my employees were not making the process more difficult for me.

Harry Trainor is a senior trainer at Pink Tape Group.

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