If the Treasury persists with punishing the self-employed with Byzantine tax rules, most of our IT talent will be off seeking a better life abroad, says Simon Moores.
What then, will prime minister Gordon Brown do for the IT industry?
I may be jumping the gun, but the media are already working hard on Mr Blair’s political obituary, and in Whitehall I hear that Michael Foot’s famous cloth cap is already waiting to take the collection.
In fact, what I should really be asking what Alistair Darling, tipped for chancellor, will do for IT?
If, like me you’ve been running a business in IT for 20 years or so, then you’ll know that if you’re not very big and from "Over There", your chances of building an agile, competitive business have diminished quite dramatically since the last election, whether this is measured in terms of taxation, employment legislation, reversal of dividend relief for small companies or creative interpretation on the part of the Inland Revenue, in the shape of IR35 or Section 660, the so-called married couples' business tax.
In a month, I turn 48 and I find that my peers and contemporaries are split three ways. There are those that are still working in senior roles in large IT companies, the minority. Then there are the "self-employed" or have started smaller businesses because they have been sacked by large IT companies, the majority. Finally, there are those who are unable to find work, even with a successful career history behind them, because they are too old or have been out of the industry for more than 12 months.
From my own perspective, this year has been an interesting one as the Revenue appears to suspect that I’m a programmer/contractor and have expended some energy on an IR35 enquiry.
“Please look at my company website and my client list," I pleaded. “How can you confuse Zentelligence‘s consultancy work with that of a programmer contractor?"
After all, I added, “When I was acting as an ‘advisor’ to the Cabinet Office, did that fall within the IR35 legislation? Best ask Gordon what he thinks."
More serious, was the discovery, during a more recent PAYE compliance visit, that I had failed to declare properly the benefit of a Topic bar on a petrol receipt. This does, of course, constitute a grave offence for which I am very sorry, but as my accountant pointed out to a very pleasant but diligent inspector of taxes, “Sometimes Mr Moores is too busy to eat lunch" and that the 36p bar of chocolate should be considered as "subsistence and not a benefit”.
However, a bright future in Ford open prison awaits and I wonder if, like Jeffrey Archer, I’ll be allowed to continue writing my Thought for the Day while my shameless character is being reformed at Her Majesty’s Pleasure.
Seriously, though, on advice from my accountant, I’m planning a visit to Spain next month to explore the option of moving the business abroad. I wouldn’t be the first and it’s cheaper and, frequently, quicker to fly to London from Malaga or Nice than take the train from the Kent coast to Victoria.
In his book The New Barbarian Manifesto, London School of Economics professor Ian Angell warns that government has to make an effort to understand the wider spectrum of the IT industry or risk, like outsourcing, seeing the skills it needs for tomorrow’s information economy relocate to the end of another broadband pipe offering less red tape and, perhaps, a more favourable tax environment.
So, Mr Darling, what will you do for IT, assuming Gordon moves next door and gives you the job of chancellor? I have one suggestion and it involves a little courage on the part of the Treasury.
Stop treating small businesses as an easy source of taxation and cease suffocating their growth with an endless stream of red tape. A year ago, the chancellor incentivised small traders to become limited companies and then snatched away any of the real benefits in the last budget because too many did.
Small and dynamic IT service businesses are good for this country. They drive skills, create competition and could generate local employment if the environment was favourable.
Government, instead of replacing the productive workforce with legions of diversity-conscious civil servants, needs to nurture and encourage these incubator businesses rather than treat them as convenient tax targets; a short-term view which does very little to boost tomorrow’s economy.
The IT industry is a dynamic part of the economy which offers great potential for the future. It doesn’t have to be "owned" by a small number of large and often foreign players and any government, today’s or tomorrow's, of whatever direction or colour, needs to recognise this or be prepared to see the nation’s talent go where it can find the best opportunity for growth without interference.
Setting the world to rights with the collected thoughts and opinions of leading industry analyst Dr Simon Moores of Zentelligence.
Acting globally, Zentelligence (Research) advises governments, suppliers, business and the media on the evolution, application and delivery of leading-edge technologies and specialises in the areas of e-government and information security.
For further information on Zentelligence and its research, presentation and analyst services visit www.zentelligence.com
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