Abolition of nil rate Corporation tax discussed

The abolition of the nil rate of Coorporation Tax, and other taxation issues, were discussed at an All Party Parliamentary Small Business Group (APPSBG) briefing in the Houses of Parliament last week.

The briefing, entitled 'Owner-managed businesses and their tax', sponsored by Lloyds TSB, the ACCA (Association of Chartered Certified Accountants), the Federation of Small Businesses and the Forum of Private Business, discussed some of the most controversial taxation issues of recent years.

The Paymaster General, Rt. Hon Dawn Primarolo, her shadow Mark Prisk MP and members of the APPSBG listened to evidence from leading experts, stakeholders and academics detailing the problems owner-managed businesses have with taxation.

APPSBG Chairman, Kerry Pollard JP MP said: "This briefing enabled us, the decision makers, to listen and question the small business community on the problems they have with taxation, the effects of recent changes, and possible solutions to these problems."

"The group was privileged to have the Paymaster General at the briefing; demonstrating the Government's commitment to dialogue on small business issues, and it's commitment to improving the lot of the UK's small firms whilst maintaining the integrity of the taxation system"

At the briefing Dr Alan Southern, of the University of Liverpool Management School and the Small Business Research Trust (SBRT), presented findings that suggested many owner-managed businesses had changed their legal status from sole-trader to limited company. Many did this in order to benefit from a reduced tax rate rather than, as the Government envisaged, as a step to growth.

The research also suggested that an uncertain and ever-changing taxation system has had a detrimental effect on business. Over 50% stated that IR 35 is a big problem and some 60% stated that the 19% on distributed profits, announced in this years budget, will be a problem.

Chas Roy-Chowdhury, head of taxation at the ACCA and a speaker at the briefing, stated that: "Owner-managed businesses require a simple, certain and fair tax system. At present it is none of them. The Government must look at radical solutions to achieve those goals. Including, the abolition of the zero rate of corporation tax, the creation of a separate legal structure for self-employment, and the removal of the tax administration barriers that prevent small businesses trading in the EU"