Empowering the Freelance Economy

IR35 could blockade new government taskforce to support female start-ups

Photo by Katerina Holmes via Pexels
0 375

The British government is launching a taskforce to support women entrepreneurs, tackle investing barriers, and increase the number of women-led fast-growing businesses outside the capital. But with many women starting out as solo-person businesses or freelancers, confusing and discriminatory IR35 reforms are likely to intimidate female-led startups from forming in the first place.

The ‘Taskforce on Women-Led High-Growth Enterprises’ is being spearheaded by Minister for Women and Equalities, Liz Truss, and chaired by Anne Boden, CEO and founder of Starling Bank

  • Government aims to increase the number of female entrepreneurs by half by 2030
  • Launch follows package of initiatives to level up employment opportunities for women
  • Only 1 in 3 UK entrepreneurs is a woman – a gender gap equivalent to 1.1 million missing businesses, and male-led SMEs are five times more likely to scale up to £1 million turnover than female-led SMEs.

“This country can only grasp its full potential by ensuring everyone, regardless of their background or where they live, has the opportunity to succeed,” said Liz Truss.

“We want women to be at the heart of the recovery effort, and we’ll do that by helping more women start a business, by getting them into higher paid work, by focusing on skills,” she said.

Anne Boden, CEO of Starling Bank will chair a new government-led Taskforce to support female startup finance

Anne Boden, CEO and founder of Starling Bank said more women than ever are starting new businesses and many of them are scaling up their companies.

“The Taskforce aims to give women entrepreneurs the tools to take their businesses to the next level: access to finance and growth capital, technology adoption and leadership skills.“The Taskforce’s work will provide a blueprint for all entrepreneurs to follow.”

How will the Taskforce actually help female entrepreneurs?

Boden, and its members, will use their combined expertise and connections to work collaboratively with organisations across the UK to support the Government’s overall target of increasing the number of female entrepreneurs by half by 2030 (equivalent to nearly 600,000 female entrepreneurs) with a particular focus on driving change in the area of growth capital.

The taskforce will build on the work of the Rose Review, which found that breaking down the barriers for women entrepreneurs could boost the economy by £250bn. While there is encouraging evidence of a pipeline of innovative woman-led start-ups, more help is needed in supporting women in high-growth business.

The launch follows a package of initiatives announced on International Women’s Day, to level up employment opportunities for women. This includes a pay transparency pilot to help businesses who want to go even further in attracting women to their companies. Evidence shows listing a salary range on a job advert and not asking applicants to disclose salary history provides a firm footing for women to negotiate pay on a fairer basis.

How is IR35 is getting in the way of female freelancers?

Many startups start as one-person limited companies. This is very common among women who have chosen self-employment over salaried jobs to pursue careers and the dream of starting their own business while raising a family. But IR35 tax reforms are pushing freelancers in the public and private sectors out of the market, which is having a serious impact on freelancers being able to grow their businesses and have the flexibility to care for their families.

These challenges were highlighted this week. A Public Accounts Committee has found that HMRC’s IR35 tax reforms surrounding freelancers and contractors are creating “widespread non-compliance” and confusion among freelancers, many of whom are being pushed into umbrella companies and giving up their self-employed status or worse, their careers. A considerable amount of seasoned freelancers have even had to go into early retirement.

The committee has reported on its findings from contractors in its report, Lessons from implementing IR35 reform, that while the reforms appear to be bringing in more tax revenue, it is also clear that structural problems remain with the way IR35 operates in practice.

“Hiring organisations cannot always get all the information needed to accurately assess a worker’s status,
and it is too difficult for workers to challenge incorrect determinations as there is no independent appeals process,” said the Committee’s report.

What is worrying is that there is a lack of good data and legislative provisions in cases of non-compliance have also meant that HMRC ends up taxing the same income twice. This is of particular concern in the public sector where—if workers or their personal service companies reclaim the taxes they already paid—the government could end up subsidising private-sector contractors for all of their tax.

The Accounts Committee has suggested that HMRC must demonstrate the system can operate effectively and fairly in the real world, and investigate whether the costs and unintended consequences are proportionate to the additional tax revenue which the reforms raise.

Meanwhile, freelancers working in the private sector have little free and useful guidance. In many cases, contractors have reported that their past clients had stopped all use of PSCs, while some contractors have increased their rates or avoided work if it is within the scope of the IR35 rules. Such behavioural impacts
have already had knock-on consequences for workers and labour markets, such as loss of work or ability to work flexibly.

“HMRC has not carried out research into these types of wider impacts, and it is not convinced by evidence provided by others even where this indicates there may be significant issues. HMRC is also too dismissive where a significant minority of people and businesses report being adversely affected,” said the report.

IR35 Archives – Freelance Informer

Could the political party that gives a damn about freelancers and their contribution to the economy please stand up?

Further information:

More information on the Government’s pay transparency pilot can be found here

The FTSE Women Leaders Review report can be found here

Taskforce members:

  • June Angelides, MBE: Investment Manager, Samos & CEO and Founder, Mums in Tech
  • Alexandra Depledge MBE: CEO and Founder, Resi
  • Poppy Gustafsson OBE: CEO and Co-founder, Darktrace
  • Judith Hartley: CEO of British Patient Capital & British Business Investments, British Business Bank
  • Zandra Moore: CEO and Co-founder, Panintelligence
  • Deepali Nangia: Partner, Speedinvest and Co-founder Alma Angels
  • Jan Putnis – Partner, Slaughter and May
  • Angela Scott : Founder and Chief Operating Officer, TC BioPharm Ltd
  • Emma Sinclair](https://uk.linkedin.com/in/ecsinclair) MBE: Co-founder and CEO, EnterpriseAlumni
  • Helen Steers: Partner, Pantheon Ventures
  • Sam Smith: Founder and CEO at finnCap Group Plc
  • Francesca Warner : Co-founder and Partner, Ada Ventures
Leave A Reply

Your email address will not be published.