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Bogus self employment figures could be ‘oversimplified’

The government’s clamp-down on the problem of false self employment has been widely publicised, with moves made towards reducing the number of businesses and individuals who are taking advantage of the system. The government believes that there are half a million people who are claiming to be self employed but are actually in employment, allowing […]

By Alex Graham on 25 Aug 2015
Read time: 3 minutes

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The government’s clamp-down on the problem of false self employment has been widely publicised, with moves made towards reducing the number of businesses and individuals who are taking advantage of the system. The government believes that there are half a million people who are claiming to be self employed but are actually in employment, allowing their employers to avoid providing them with the benefits to which they would otherwise be entitled.

A report conducted by Citizens Advice which suggests that as many as one in ten of the 4.5 million self employed individuals are ‘unsatisfied’, ‘confused’ or ‘exploited’ appears to demonstrate that the politicians’ fears about the problem are confirmed. But the Freelancer & Contractor Services Association has responded to the report suggesting that their interpretation of the results is an ‘over-simplification’ of the truth and that the results of the Citizens Advice survey may not be telling the whole story.

The figures provided by Citizens Advice suggest that 10 per cent of the independent workers that it polled from those in their network, comprising their website, internal system and local offices, could be classified as ‘suspect’ employees and might effectively be members of staff. But the FCSA is concerned that the Citizens Advice’s figures are skewed towards those at the lower end of the pay scale, meaning that scaling up their figures might not provide an effective method of estimating the true number of those affected, a fact that Citizens Advice acknowledge.

The FCSA has conducted its own research which shows that self employment is more common amongst those at the professional end of the spectrum, suggesting that the real figures pertaining to false self employment are much more likely to be lower than those estimated by Citizens Advice. The FCSA’s main concern is that the announcement could lead to panic amongst those who might be affected and those in power, which could have serious repercussions, especially considering how complex the problem actually is.

The FCSA welcomes the attempts of Citizens Advice to shed light on some of the poor practices and expose some of the employers who are attempting to take advantage of individuals who should rightly be employed. An estimated average of £1,288 a year is lost in holidays alone by each individual who is employed incorrectly as freelancer, so it is a serious concern to anyone representing those affected.

But Citizens Advice seems to be convinced that the matter of employment, self employment and false self employment is simpler than most industry bodies believe, and the ongoing debate over IR35 and employment status would seem to suggest that Citizens Advice’s assertion that ‘defining self-employment status is straightforward’ may be incorrect.

If you want to know more about employment status, the intricacies of IR35 or anything else about working for yourself, then speaking to one of our specialist accountants could help you to ensure that your finances are in order. You could save time and money by taking our expert advice, so call today on 01253 362062 or email us at contractoradvice@nixonwilliams.com.

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