Finance Bill

My hon. Friend hits the nail on the head. Far too many people who are legitimately in business on their own account as genuine freelancers will be hit by the legislation, which is designed to target abusive schemes. It is critical that we do not produce legislation that makes it difficult for companies to take on freelancers and contractors. That could significantly damage our competitiveness as an economy and the flexibility of the UK labour market. As on the third-party debt provisions that I outlined, and in the same way as for section 61B, there is a carve-out aimed at removing professional advisers and recruitment firms from the scope of the provisions. However, the carve-out suffers from a number of the same uncertainties that I outlined earlier in relation to the definition of a managed service company provider. There is a real risk that recruitment firms and professional advisers might still fall foul of the encouragement or active involvement tests set out. Ann Swain, chief executive of the Association of Technology Staffing Companies, stated:"““It seems completely contrary to all common principles of justice to make companies that have no legal control over individuals liable for their tax. The Government tried to make the recruitment industry liable for contractors’ tax affairs when it introduced IR35, but eventually backed down. Here we are six years later facing the same tax grab on the recruitment industry. The attitude seems to be that if Revenue and Customs cannot ensure contractors comply with tax law, because it is too difficult to apply, other parties need to be made to pay””." The Opposition believe that the recruitment industry is a vital part of ensuring a flexible and efficient labour market, and that much more time, reflection and thought are needed to ensure that the industry is not damaged by the proposals in schedule 3. We hope to table amendments in Committee to bring that about. I have received representations pointing out that the potential liabilities under the third party debt provisions are uninsurable, and that public companies involved in working with freelancers and small service companies are being advised that they would have to set so much aside as a contingency as to have a significant impact on their share price. The debt transfer provisions could also involve considerable litigation risk, as companies might end up blaming one another for being dragged within the scope of schedule 3.