In its Budget representations, ACCA had called for the government to reform the tax system radically, making taxation simpler in the interests of promoting business efficiency. However, the chancellor opted for introducing new levels of complexity.
‘We wanted Gordon Brown to cut red tape. Instead we are left with a more complex tax system, with a mass of small details which tax payers and smaller business will find impenetrable. They may never benefit from the trumpeted tax reductions,’ said Chas Roy-Chowdhury, secretary to ACCA’s taxation committee.
‘In appearing to pull off a clever balancing act, the Chancellor has, in fact, performed a magic act which tax payers may never fully unravel,’ he added.
Budget E-Commerce Measures Boosts SMEs
ACCA welcomes the chancellor’s plans for of fiscal reforms which will encourage Britain’s technology industries, but it still considers the four year lock-in for Capital Gains Tax is too long.
In his statement to parliament today, the chancellor has encouraged companies to move more strongly into e-commerce in order to keep pace with America. ACCA backs his incentives to encourage businesses to get online over the next three years. They will be able write all costs of new equipment related to e-business against tax. This will encourage SMEs to become more involved in the technological revolution, in which Britain is the leader in Europe.
David Harvey, head of ACCA’s Small Business Unit, said: ‘ACCA is pleased that the government is establishing a clear policy to promote and strengthen e-business, although tax allowances alone are insufficient. Benefits are often wiped out by the welter of red tape which is faced by all small and growing companies.’
Disappointed with Capital Gains Tax changes
The Government’s proposed cuts to Capital Gains Tax do not go far enough.
Mukesh Gunamal, chairman of ACCA’s Taxation Committee, said: ‘Capital Gains Tax is a complicated area which is in much need of radical overhaul. Although the Government has recognised the burden that CGT places on business, it has failed to measure the disproportionate compliance burden imposed on the tax payer.’
‘In our original budget submission we suggested the total abolition of CGT on business assets. It is more complex and less small-business friendly than any other tax,’ says Mukesh Gunamal.
Under the Budget proposals, the effective rate for Capital Gains tax rate on business assets will decrease to 35% after the first year, 30% after two years, 20% after 3 years and 10% after four years.
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