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.
This was first published in March 2001