CIOT Gives Lukewarm Response To Tax Proposals

by Jason Gorringe, Tax-news.com, London

20 June 2001

The Chartered Institute of Taxation announced yesterday that while it welcomes Chancellor Gordon Brown's proposed tax reforms for small businesses and entrepreneurs, there is still a great deal more to be done, particularly in the area of red tape reduction. 'Any measures that reduce the tax burdens on business can help,' said Institute President, John Whiting, 'though I hope it is remembered that one of the main burdens that the tax system imposes that needs attention is the administrative one. '

The CIOT's response to the reforms that the Chancellor has proposed was welcoming but somewhat lukewarm, and the majority of the measures were damned with faint praise. The Institute said that changes to the capital gains tax taper regime for individuals were gratifying, but a little alarming considering that the existing regime is less than three years old, and wondered whether the commitment to review the non-business asset taper regime was a tacit acknowledgement that the entire capital gains tax system has become overcomplex and unwieldly. Disappointment was expressed that Mr Brown made no mention of any capital gains changes for companies, and the extension of the 10% corporation tax band to smaller businesses was deemed 'cosmetic but welcome.'

However, they were (slightly) more enthusiastic about the promised review of payroll services for smaller firms, stating that it could be 'the most important measure of the lot', if it leads to a simplification of the payroll process and reduces the chances of PAYE and NIC errors. The Institute also said that it awaited with interest details of the flat rate of VAT for small businesses. Although reforms to the Enterprise Management Incentive scheme were cautiously welcomed, the Institute took this opportunity to remind the government that there are still many other problems with the share option regime in need of attention.

However, Mr Whiting believes that there is plenty of time to dot the 'i's and cross the 't's of the recent proposals, and stated that the CIOT is looking forward to being actively involved in consultations with the government on the issues raised earlier this week, and others that were announced in the March budget, but haven't made it to the statute book yet. 'We will have to wait until April 2002 for many of the changes to come into effect- so there is plenty of time to get the detail right and the impact understood,' he said.

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