In practice, this would achieve the following things;
1. It would be very simple and inexpensive to administer
2. It would ensure that all contractors paid a fair amount of tax, allowing for the fact that they are responsible for their own sickness and holiday pay, pensions, healthcare, insurance and for periods out of work
3. It would kill off a significant amount of avoidance (why go to the trouble if the amount you can earn is reasonable and its administration simple?)
4. It would bring in a significant amount of tax to the Treasury on a monthly basis (a contractor earning the maximum (£299k) would contribute £65,780 per annum or £5481 per month. A contractor on a more frequently achieved rate of £100k pa would contribute £22,000 per annum or £1833 per month
5. It would allow the Government to reduce the number of Inspectors working at HMRC (increased by thousands in the last few years) as the rate of investigation would be significantly decreased (no IR35, BN66 etc) thus saving tens of millions per annum and more in the longer term (pensions and pay rises)
6. Most contractors agree (my own knowledge, some wider studies) that paying a reasonable amount of tax is fair and they would be happy to so do but have felt increasingly "targeted" and victimised by the current regime. Improved relations with the Government and especially with HMRC can only be a positive thing
7. It could be introduced quickly and efficiently and the savings (and earnings) could be felt within months thus helping the deficit
8. Accompany it with a requirement to contribute to a private pension scheme. This would allow contractors to forward plan better (pension especially) thus reducing the future burden on the state
I respectfully submit this idea for consideration