The ICAEW welcomed measures to encourage and reward entrepreneurship but cautioned that more needs to be done to help business in the short term.
‘We welcome the continued focus on enterprise contained in the chancellor’s Statement,’ said Ian Hayes, chairman of the ICAEW Tax Faculty.
‘Measures such as the abolition of stamp duty on property transfers in enterprise areas as well as the funds earmarked to help promote enterprise in schools and universities are important steps towards ensuring the long-term future of UK plc.’ Despite this he warned that with the current global downturn more needs to be done in the short term to help small businesses survive. ‘Initiatives such as the extension of the Small Firms Loan Guarantee Scheme are precisely the kind of measures which can help fledgling entrepreneurs stabilise.’
ICAEW audit and assurance faculty
The audit and assurance faculty of the ICAEW welcomed Gordon Browns pre-Budget report.
The chancellor stated in his speech that ‘following the exemption for 200,000 firms of the requirement for a statutory audit we will consult next year on the same deregulation for medium sized firms.’
This, said Andrew Ratcliffe, chairman of the faculty, was a positive step to ease the burdens on business.
‘While we welcome the prospect of fewer burdens on business these have to be balanced against the needs for shareholders to receive assurance on financial information” Ratcliffe said.
The DTI stated that the PBR will result in thousands of small businesses finding it easier to obtain bank loans.
From next April, a whole new raft of sectors – including retailers, caterers and motor mechanics – will be eligible for the Small Firms Loan Guarantee Scheme, whereby the government provides a guarantee encouraging banks to lend to small firms.
‘It’s estimated that the move will mean a 25% increase in loans granted under the scheme,’ a statement read.
‘The revised scheme, which will be one of a much reduced number of business support schemes, will make an important contribution to the DTI’s objective of driving up productivity.’
Patricia Hewitt, Trade and Industry Secretary, said: ‘The changes will mean even more small businesses can benefit from the scheme, making a real difference to those that find it difficult to obtain bank finance.’
Ernst & Young
Ernst & Young said the pre-Budget report shows Gordon Brown is fast running out of options if he is to keep the economy afloat.
National head of tax Aidan O’Carroll said: ‘We knew the news would be bad but this is a huge overshoot, and it’s not acceptable just because some carefully selected statistics suggest other countries are doing worse.
‘We don’t agree that the global slowdown is responsible for everything that’s wrong in the UK economy. It certainly can’t be blamed for the onward rush of house price inflation.
‘We’re looking at a situation in which the country is going to borrow £20bn more over the next two years than we were told we needed only six months ago. ?The tax changes he announced sounded innocent enough but many of them imply complexity and some are revenue-raising.’we hoped the Government would learn from experience with individual learning accounts, but they are sticking with these over-engineered tax credits which are really so complex we fear that either no-one will claim them or they’ll be a fraudster’s charter. This is especially true of the children’s trust fund proposal,’ he said.
But Derek Jenkins, tax partner, at PricewaterhouseCoopers was disappointed that increased borrowing levels might lead to higher interest rates.
Despite this he did say that although this could put UK plc at a competitive disadvantage, it would only do so for a short time if the chancellor’s growth predictions prove correct.
‘The UK may be able to retain its position as one of the world’s strongest economies in the longer term,’ he said.
He went on to say the report detailed tax provisions, which will have an adverse impact on the construction industry and electrical retailers and that confirmation that the new tax regime for UK branches of foreign companies will go ahead with very few changes from the original proposals in the April 2002 Budget. ‘This will be expensive for overseas banks operating in Britain,’ he said.
The accountancy firm slammed Gordon Brown for failing to tackle red tape and cash flow problems that business start ups and growing businesses encounter.Guy Smith, tax partner at the firm, said: ‘In the March 2003 Budget, the chancellor should consider introducing wider tax reliefs for companies in their early stages of development, similar to the income tax reliefs that are currently available to sole traders and partnerships.
‘The Government could take this a stage further by introducing a form of taxcredit relief against losses. This will enable entrepreneurs to obtain cashrefunds, as it is cash shortages, not profit shortages which are the biggestobstacle to further growth.
‘Of course, much depends on the Government’s review of the responses to theirconsultative document on corporation tax reform and we await their proposalswith interest,’ he said.
Charity Finance Directors’ Group
The CFDG stated its disappointment at the lack of concessions on VAT and National Insurance contributions following the PBR.
Commenting on these failures, CFDG Vice Chairman said: ‘We are disappointed the chancellor has granted no further concessions on VAT, or introduced mitigating measures to alleviate the estimated £50m burden that will fall on the sector due to the increase in National Insurance contributions next April.’
But he did welcome the proposals to extend payroll giving, the consultation on corporate volunteering, and the financial scheme to help low income youngsters take a year out volunteering in the community.
Council of Mortgage Lenders
Jennet Vass, senior economist at the CML said that while the PBR didn’t bring any good news, she was relieved by the absence of any bad news., commenting:’On balance, today’s statement reinforces our central forecast that the housing market remains set for a relatively soft landing,? she said. ?At the same time, the risk of a bumpier ride continues to increase – and nothing the chancellor said reduces that risk.’
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements