The budget aroused mixed feelings in SMEs as although they welcomed
proposals to reduce tax and regulatory burdens, they were critical
of the Chancellor for failing to tackle the encumbrance of red
tape.
Under the proposals, SMEs will be able to file a simple version of
their profit and loss accounts to the Inland Revenue, in place of
more complicated accounts providing details of spending and income.
Other welcome measures included a raising of the thresholds
under which SMEs pay VAT and help on training, as well as extra
powers for the Department of Trade and Industry’s Small Businesses
Services to help small companies get started.
Chancellor Gordon Brown said: “I propose a further modernisation
of the corporate tax system to meet the needs of a more
knowledge-based economy and to introduce a new tax relief for
intellectual property and goodwill. We will also consult in detail
on relieving tax when companies sell substantial
shareholdings.”
The FSB welcomed the budget, but said it was disappointed there
was no action to lessen the administrative burden of the Working
Families Tax Credit or a review of the IR35 legislation.
But the new budget is deemed to have failed the IT industry,
according to the Butler Group, which warned it could lead to a
downturn in e-business.
Ian Lynch, director of strategic advisory services at the
company, argued: “The tax code is becoming more and more complex as
incentives, allowances, special tax reliefs and benefits are piled
up. This creates a confusing mess which can distort the behaviour
of business.”
By offering capital allowances to companies implementing new
technology, the government was disrupting the dynamics of
business.