Budget gamble fails to recognise the needs of business, says ICAS
24 Apr 09
The Institute of Chartered Accountants of Scotland says the Budget projects high public sector borrowing and rising taxes for several years ahead but leaves no room for manoeuvre if his ambitious economic growth targets are not achieved
It is Britain’s businesses that will be expected to deliver the growth, says ICAS, but they are subject to a tax system mired in complexity.
While large businesses reassess the nation’s fiscal competitiveness in the light of a new regime for taxing UK companies on their foreign profits, their senior executives and other entrepreneurs face swingeing personal tax increases and loss of tax relief on pension contributions.
Tax help to businesses is much needed and welcome, but the tax system is now so complex that there is no way of knowing whether the assistance offered will be effective or even understood.
For example, the tax allowances for capital expenditure on fixed assets have been altered so often that business proprietors are unable to keep abreast of the changes.
Furthermore, rules announced in the pre-Budget report to give extended tax relief for trading losses have been revised again in the Budget and still include a £50,000 cap that prevents them from providing real help to many deserving businesses.
Bob Crawford, convenor of the ICAS Tax Committee, said: “Rather than complex changes, businesses need stability and certainty in their tax affairs, and simple well-targeted temporary measures to help them through the recession.
“Instead, they are about to be faced with yet another Finance Bill containing a plethora of new anti-avoidance provisions that will be incomprehensible to all but tax specialists.
“Against that background, businesses and individuals are to be ‘named and shamed’ if they get their tax seriously wrong, and senior company executives are to face personal penalties for shortcomings in their companies’ accounting systems.”