BusinessCompany NewsInstitutes demand simple route to disincorporation

Institutes demand simple route to disincorporation

The recent flood of small business incorporations could be reversed if the government bows to industry demands to allow companies a simple route back to their previous structures.

Link: Budget fears end rush for incorporation

Uncertainty surrounding paragraph 591 of the pre-Budget report, which promises to clamp down on the tax affairs of small companies, has led to unanimous calls from the profession for a relaxation of capital gains tax liabilities on ‘disincorporation’.

‘Many businesses are discovering they are inappropriately structured,’ reads the ACCA’s 2004 Budget representation. ‘There seems to be no reason whatsoever why a proper and fair route to tax-free disincorporation cannot now be introduced.’

Many small businesses incorporated after Gordon Brown introduced a zero-rate tax on companies with profits below £10,000 in his 2002 Budget. Hundreds of thousands of firms have since incorporated, but could face the removal of incentives while still facing the burdens of being a company.

Frank Haskew, head of the tax faculty at the ICAEW, said the institute would be calling for ‘disincorporation reliefs’ in its Budget representation.

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