Tax Experts Attack Brown's 'Hideously Complex' Tax Policy

by Jason Gorringe, Tax-News.com, London

03 June 2004

The professional association representing the interests of the UK’s tax industry has launched a scathing attack on the government’s tax policies, accusing Chancellor Gordon Brown of making the system “hideously complex”.

Whilst giving evidence in the House of Lords Committee examining the Finance Bill, the Association of Taxation Technicians pointed to the recent 19% dividend tax levied on small firms with less than £50,000 in profit, which it said will have business owners chasing their tails attempting to calculate.

"To decide how much dividend to pay yourself, you need to know how much tax you are going to pay. But to know how much tax you will pay, you need to know what the dividend payment will be," noted Andrew Hubbard, president of the ATT.

He added that taxpayers are liable to pay themselves dividends which have not been fully taxed and the new system will add to the uncertainty faced by small businesses.

Since Brown introduced the new tax, intended to prevent exploitation of a £10,000 tax-free allowance for small firms, Companies House has recorded an almost 20% year-on-year decline in the number of new business registrations, something tax experts attribute to a reluctance on the part of the self-employed to incorporate.

The government is expected to launch a review of small business taxation in its pre-budget report later in the year.

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