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Brown told to make business less taxing

The UK’s most vocal small business supporters have tabled their annual wishlists for the Budget to Gordon Brown, putting tax simplification at the top of the agenda.

Most pertinent to freelancers is the call by the Federation of Small Businesses, which wants controversial tax rule - IR35 – dubbed 'the freelancer’s tax', wiped from the statute books.

The Intermediaries legislation continues to cause administrative burdens for firms and tax authority alike, and “suppresses a vital route to entrepreneurship”, the federation said.

As highlighted by the number of investigations handled by the Professional Contractors Group, there is also a question mark over the tax rule’s efficiency at generating revenue.

In calling for its outright abolition, the FSB added similar concern over the application of IR35's bedfellow - S660a, which it says has worried owner-managers in recent years.

A landmark case between HM Revenue & Customs and Arctic Systems, a family-run IT firm, will be concluded by the Lords in June, after which the FSB hopes the “uncertainty can be resolved.”

Sharing concerns about the current tax system is the British Chamber of Commerce, which wants Gordon Brown’s final Budget to be remembered for simplification.

In particular, the National Insurance and Pay-as-you earn regime should be streamlined “as a matter of urgency,” the BCC said.

The move, which should be accompanied by the creation of a common definition of terms across the tax regime, would ensure the tax regime is easier to administer.

Like another small business lobbyist, the Institute of Directors, the chamber also believes the current rate of corporation tax is worth reconsidering.

But the Institute has been more specific in its proposal by urging today’s standard 30% tax rate for enterprise should be lowered to 28%.

Although only marginal, the IoD says the reduction would “increase the UK’s prospects of attracting business which might otherwise be located in other developed countries.”

Despite individual differences in terms of members and agenda, all three business groups agree that a review of the tax system is pressing, as the institute’s Miles Templeman explained.

“Competitiveness is not a single issue, but when the U.K. is already less than world-class in other areas, such as transport and education, erosion of our previous relative advantage in the burden of taxation, could become hugely significant,” he said.

“In this way tax could become a ‘tipping-point’ issue for international companies.”

Gordon Brown will deliver his eleventh annual Budget speech to the House of Commons on Wednesday March 21.

Mar 13, 2007
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