The Federation of Small Businesses this week called for IR591 to be postponed for at least one year until at least next year so that full consultation can take place between the Treasury and businesses, accountants and tax advisors. They are also one of many organisations demanding that the Government provides more information as a matter of urgency. Currently it is still totally unclear what the proposals are, and when they are likely to be introduced.
The FSB have warned small businesses that Gordon Brown could be set to implement the way he taxes small limited companies as early as this April.
Neil Hamper, FSB Taxation Chairman said:
“We can’t be sure about what is going to happen as the Chancellor has so far refused to shed light on the subject but the suspicion is that small companies will be forced to pay National Insurance on their dividends .”
“When you are short of money, every little bit here and there helps. It is disappointing that in Gordon Brown’s desperation to increase the ‘tax take’ he is ignoring the Government’s promises about being open, consulting on changes and talking to people who will be affected.”
The influential Treasury Select Committee last week backed the FSB’s calls and called on the Chancellor to publish more details “in advance of the budget.”
The FSB has consistently warned that that the Government was storing up trouble for itself by creating a significant tax advantage for one type of business structure over another. Over the last few years the Government has introduced tax advantages for limited companies but not for unincorporated businesses. These have included a zero starting rate of corporation tax for taxable profits under £10,000 and a 19p corporation tax rate between £10,000 and £300,000. As a result many sole traders and partnerships have incorporated and the Treasury has been left out of pocket. The FSB believes that it is unfair of the Government to retaliate when this situation was entirely predictable. The FSB continues to call on the Government to introduce a £10,000 tax free allowance for all small firms to help to level the playing field.
The FSB offers a tax advice line to its members which last year received around 10,000 calls. Members can keep up with the latest state of play by phoning the advice line and quoting their membership number. Non-members should contact their accountant for further professional advice.
Who are the FSB?
With over 185,000 members, the FSB is recognised as the voice of small business by leading politicians of all major parties.
There are many benefits to joining the FSB including legal protection and insurance services.
Source: FSB