Fair family business tax is 'mission impossible'
Family businesses reprieved from tax changes after intense lobbying
The government faces an ‘impossible task’ to create a fair tax regime for
family businesses despite delaying the introduction of controversial income
shifting rules, warn advisers.
Plans to introduce new family business tax legislation, following HM Revenue
& Customs’ loss against Arctic Systems in the courts, has been delayed until
April 2009 after furious lobbying by advisers and the SME community.
The delay has been welcomed by tax advisers, concerned about the introduction
of red tape and opaque rules, but they warned that a massive push would be
needed to create a fair and simple regime by next year.
‘They’re trying to do the impossible, but I’m delighted the government is
delaying,’ said Anne Redston, visiting professor at Kings College London.
‘But it’s unlikely we’ll get to a position where there are workable rules.
Provisions at the moment are broad-brush, and clearly unworkable,’ she adds.
KPMG’s UK head of the middle market, Tom McGinness, said the delay was
welcome but other tax plans for SMEs, announced in the Budget, such as altering
the R&D tax credit rules and changing who can claim tax relief on share
options, was making life ‘more complicated’ for SMEs.
‘They’ve done well deferring income shifting rules, but more red tape is
coming through,’ said McGinness.
Smith & Williamson national tax director Richard Mannion said that rather
than update legislation on family business taxation next year, a ‘root and
branch review’ of the tax rules for owner-managed businesses was required.