BusinessCompany NewsPBR: Warm welcome for Small Business Unit

PBR: Warm welcome for Small Business Unit

The chancellor's announcement that the head of the merged HMRC, David Varney, has set up a Small Business Unit has been warmly welcomed by the small business community.

The idea of the unit is to enable small businesses to file a single tax return and simultaneously simplify their tax affairs

The single point of return will amalgamate corporation tax and VAT onto one return form, reducing the burden of red tape on small companies.

Simon Juden, chairman of the Professional Contractors Group, said that the reduction in the number of forms small businesses will have to fill out would be a ‘key factor’ in relieving unnecessary paperwork. Despite no clearer indication on IR35 or Section 660A, he also welcomed the publication of the government’s promised discussion paper on ‘small companies, the self employed and the tax system’.

‘The paper recognises the key concerns that we have been discussing for some time. It has taken the crucial step of explaining that people should start businesses for commercial and not tax incentives.’

The Federation of Small Businesses was also pleased with the Treasury’s ‘first principles’ approach to its discussion paper but was disappointed it was not mentioned in the chancellor’s PBR speech.

‘The government has recognised that business status should be modelled on a commercial and not a tax decision. We are pleased it is going the right way and starting from the right principles,’ said an FSB spokesman.

The FSB also welcomed the creation of the Dave Hartnett chaired SBU but said it was ‘sceptical’ of its chances of success and that it should aim to bring in the ‘right’ private sector involvement.

The profession also welcomed the measures but warned that complex taxation was still a huge obstacle for SMEs.

Kevin Nicholson, tax partner at Pricewaterhousecoopers, said: ‘The government has announced a fundamental review of the taxation of small business. However, the concern is that in trying to encourage small businesses to grow, the chancellor manages to wrap them up in more red tape by introducing complicated incentives and reliefs. ‘A commitment to simplification coupled with a real drive to reduce the overall tax burden for small businesses is the only way to really encourage enterprise.’

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