UK’s Small Businesses Identify Tax As Most Crucial Election Issue

by Robert Lee, Tax-News.com, London

15 February 2005

The Federation of Small Businesses is urging the government to overhaul the UK taxation system after many of the FSB’s 185,000 members identified tax as the most important issue facing them in the run up to the general election, which is expected in May.

According to a report in the Financial Times, when polled by the FSB, business owners typically complained most about the heavy-handed attitude of the Inland Revenue towards small business and the self-employed, particularly the disproportionate penalties for late returns and “draconian” tax inspections.

"Tax cuts will be important at the forthcoming election, but small businesses also want a commitment from politicians to make the taxation regime fairer and less brutal,” noted Neil Hamper, FSB taxation chairman. He added that the perception of the Revenue by the self-employed was that the tax system treated them as “inherently untrustworthy.”

To restore some fairness to the tax system, the FSB has made eight recommendations to the government, including: the introduction of a £10,000 tax-free allowance for all small businesses irrespective of their legal status; the abolition of IR35 legislation; reducing the burden of administering state benefits; the introduction of new VAT rules to allow VAT-free movement of goods between registered traders; the introduction of small business rate relief for business premises with a rateable value of less than £25,000; and a review of the climate change levy.

The FSB also urged the United Kingdom to resist moves to harmonise corporate tax rates within the European Union.

Recommended