‘There have been considerable misunderstandings over the number of businesses
that will be affected,’ Treasury business and indirect taxation director Edward
Troup has told members of the Treasury select committee.
‘We have been quite clear that the rules act as a deterrent to those who want
to mitigate tax in a way that the government doesn’t intend and not as an
administrative burden for small businesses.’
Troup said the Treasury estimated that the income shifting rules, which have
been postponed to 2009, would recoup £260m in tax and was adamant that the costs
of administering the regime would not exceed that sum.
Liberal Democrat committee member John Thurso said the rules meant that HM
Revenue & Customs and the Treasury would be ‘setting director fees for small
businesses in the UK’, as it would be left to tax inspectors to decide whether
both partners in a husband and wife business were making a proper contribution
to the business and eligible for tax relief.
Troup said the delay in implementation would give the government time to work
through these issues.
‘The main reason we put the rules off is so that we can deliver something
that does not have these problems,’ he said.
At the same hearing, Mike Williams, director of personal tax at the Treasury,
said the government expected 3,000 non-domiciled taxpayers to leave as a result
of the new £30,000 levy, claiming the move would not have a significant impact
on the UK economy.
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