Call for Budget incentives for small business
A firm of accountants has called on the Chancellor to use this week's Budget to move away from the fixation with 'tax avoidance' and introduce genuine incentives for small businesses, such as re-instating the tax relief on IT equipment.
But chartered accountants and business advisers MacIntyre Hudson predicts that Gordon Brown's forthcoming Budget (Wednesday, March 16) will offer only minor incentives to woo the business-owners' vote.
Anti-avoidance
Victor Dauppe, partner at MacIntyre Hudson, said: "With an election on May 5th looking all but certain, any increase in the most obvious taxes such as National Insurance Contributions (NICs), income tax or VAT is unthinkable. However, with an ever-growing deficit, Gordon Brown also has no scope for the usual pre-election hand-outs.
"In one sense this is good news for business - it's unlikely there will be anything nasty or unexpected. However, this is little comfort for the businesses for whom the increase in complicated regulation and the growing focus on 'anti avoidance' is as much a legacy of this Chancellor as is the stable economy and independence of the Bank of England.
Incentives for enterprise
This Budget presents a golden opportunity for the Chancellor to announce consultations on some of the more reviled issues. Gordon Brown has promised to encourage enterprise through tax incentives, yet such initiatives are undermined by the Government's obsession with stamping out 'tax avoidance'. Reform of these initiatives would add weight to the Chancellor's claims to be a champion of enterprise.
MacIntyre Hudson has urged the Chancellor to announce simplification of Substantial Shareholdings Relief and the Enterprise Incentive Scheme and also to take the responsibility for awarding Tax Credits away from the Inland Revenue.
Victor Dauppe, Partner at MacIntyre Hudson said: "Measures such as the Enterprise Management Initiative (EMI) and Enterprise Incentive Scheme (EIS) are so complicated that very few business owners can understand, let alone benefit from them.
"Moreover, by making the Inland Revenue responsible for incentives and tax credits, as well as the generation of tax revenues, the Government has made the Inland Revenue face two ways at once and the evidence suggests that this isn't working. The Revenue is focused more on anti-avoidance than on handing out incentives to stimulate economic activity. As a result, reform is urgently required to inject much needed flexibility into schemes such as EIS."
IT equipment and electronic filing
Possible 'sweeteners' for small business include the reintroduction of accelerated capital allowances for IT equipment and greater incentives for electronic filing.
MacIntyre Hudson predicts that the Chancellor will reintroduce accelerated capital allowances for IT equipment and greater incentives for electronic filing.
Victor Dauppe said: "The Government likes to be seen as modern and wants to encourage an IT literate and web aware population. By bringing back capital allowances for IT equipment and encouraging online tax return filing, the Chancellor could be seen as doing something positive for smaller enterprises."