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24/03/2011
Budget’s Small Business Growth Strategy Is Just First Step, Says Forum
One of the UK's leading business organisations is welcoming several short-term measures to boost enterprise announced in yesterday's Budget. However they argue that more must be done in the long-term if small businesses are to truly drive economic growth and job creation.
The Forum of Private Business believes substantial measures on fuel duty and cancelling annual rises, that had resulted from the introduction of the fuel duty escalator, should provide some cash flow relief for struggling small firms.
Equally, the Forum is welcoming a range of small business tax breaks including lower rates for businesses based in 21 new ‘enterprise zones', increasing tax relief available under the Enterprise Investment Scheme and the decision to keep Community Investment Tax Relief contrary to recommendations made by the Office of Tax Simplification (OTS).
However, while the Forum also welcomes the Government's continued commitment to reducing corporation tax overall, it is disappointed that small firms' corporation tax bills are not being reduced by a similar rate to the higher level paid by big businesses, which the Chancellor is now slashing by 2% in April - double the reduction that had been planned - and from 28% to 23% by April 2014.
The Forum believes a number of opportunities have been missed for real root-and-branch tax simplification and radical reforms, taking small firms out of tax wherever possible - incentivising small businesses charged with leading economic recovery, rather than pandering to large companies. In its submission to the 2011 Budget, the Forum called for the lower corporation tax rate to be cut to 17%.
In particular, the organisation is concerned that simply lowering from £18 to £15 the threshold price of goods shipped via the Channel Islands on which no VAT is payable will not stop large companies exploiting Low Value Consignment Relief (LVCR).
The Forum agrees with the pressure group Retailers Against VAT Abuse (RAVAS) that the real test is whether businesses that do not have offshore facilities can now compete on an equal basis with their counterparts on the Channel Islands. The answer for smaller retailers, including those selling CDs and DVDs which will still have to charge VAT, is clearly no.
It is important that the Government's plans to work with the European Commission to limit the scope of the relief so that it can no longer be exploited for a purpose other than what it was intended for stops the LVCR trade once and for all.
The Forum also believes that merging Income Tax and National Insurance (NI) into a single payroll tax is a step towards simplifying the UK's complex tax system, and welcomes the announcement of a consultation into this, but is concerned that NI - a tax on employment at a time small businesses are charged with creating jobs - is still rising for most firms.
With the ability of small businesses to employ people under scrutiny, and a raft of employment legislation covering issues such as the default retirement age, pensions, parental leave and agency workers on the horizon for 2011, the Government's plans for red tape have been keenly anticipated by business owners struggling to cope with the annual £12 billion cost of compliance bill.
Providing it produces measures that actually reduce small firms' administrative burden, a review of all existing business laws is both welcome and long overdue - as is a specific review of health and safety law with a commitment to scrapping all unnecessary health and safety red tape.
In its capacity as Secretariat of the All-party Parliamentary Group on Micro Businesses, the Forum is also backing the Government's announcement that all firms with 10 employees and fewer - both start-ups and established businesses - are to be given a three-year holiday on incoming red tape.
However, the organisation is concerned that the moratorium will not apply to red tape stemming from EU law - which creates the majority of regulatory hurdles for small firms - and is also calling for similar regulatory relief for larger SMEs that have also been charged with creating the jobs set to be lost in the public sector.
The Forum is also welcoming the announcement of an additional 50,000 apprenticeships over the next four years, but believes more support is required to help entrepreneurs create these apprenticeships within their businesses, and proposed changes to make planning laws more business friendly.
(BMcN/GK)
The Forum of Private Business believes substantial measures on fuel duty and cancelling annual rises, that had resulted from the introduction of the fuel duty escalator, should provide some cash flow relief for struggling small firms.
Equally, the Forum is welcoming a range of small business tax breaks including lower rates for businesses based in 21 new ‘enterprise zones', increasing tax relief available under the Enterprise Investment Scheme and the decision to keep Community Investment Tax Relief contrary to recommendations made by the Office of Tax Simplification (OTS).
However, while the Forum also welcomes the Government's continued commitment to reducing corporation tax overall, it is disappointed that small firms' corporation tax bills are not being reduced by a similar rate to the higher level paid by big businesses, which the Chancellor is now slashing by 2% in April - double the reduction that had been planned - and from 28% to 23% by April 2014.
The Forum believes a number of opportunities have been missed for real root-and-branch tax simplification and radical reforms, taking small firms out of tax wherever possible - incentivising small businesses charged with leading economic recovery, rather than pandering to large companies. In its submission to the 2011 Budget, the Forum called for the lower corporation tax rate to be cut to 17%.
In particular, the organisation is concerned that simply lowering from £18 to £15 the threshold price of goods shipped via the Channel Islands on which no VAT is payable will not stop large companies exploiting Low Value Consignment Relief (LVCR).
The Forum agrees with the pressure group Retailers Against VAT Abuse (RAVAS) that the real test is whether businesses that do not have offshore facilities can now compete on an equal basis with their counterparts on the Channel Islands. The answer for smaller retailers, including those selling CDs and DVDs which will still have to charge VAT, is clearly no.
It is important that the Government's plans to work with the European Commission to limit the scope of the relief so that it can no longer be exploited for a purpose other than what it was intended for stops the LVCR trade once and for all.
The Forum also believes that merging Income Tax and National Insurance (NI) into a single payroll tax is a step towards simplifying the UK's complex tax system, and welcomes the announcement of a consultation into this, but is concerned that NI - a tax on employment at a time small businesses are charged with creating jobs - is still rising for most firms.
With the ability of small businesses to employ people under scrutiny, and a raft of employment legislation covering issues such as the default retirement age, pensions, parental leave and agency workers on the horizon for 2011, the Government's plans for red tape have been keenly anticipated by business owners struggling to cope with the annual £12 billion cost of compliance bill.
Providing it produces measures that actually reduce small firms' administrative burden, a review of all existing business laws is both welcome and long overdue - as is a specific review of health and safety law with a commitment to scrapping all unnecessary health and safety red tape.
In its capacity as Secretariat of the All-party Parliamentary Group on Micro Businesses, the Forum is also backing the Government's announcement that all firms with 10 employees and fewer - both start-ups and established businesses - are to be given a three-year holiday on incoming red tape.
However, the organisation is concerned that the moratorium will not apply to red tape stemming from EU law - which creates the majority of regulatory hurdles for small firms - and is also calling for similar regulatory relief for larger SMEs that have also been charged with creating the jobs set to be lost in the public sector.
The Forum is also welcoming the announcement of an additional 50,000 apprenticeships over the next four years, but believes more support is required to help entrepreneurs create these apprenticeships within their businesses, and proposed changes to make planning laws more business friendly.
(BMcN/GK)
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