BCC says Chancellor could have done more

THE Government has always pledged to small businesses that it would strive to reduce the tax and regulatory burden they feel. But after today‘s pre-Budget speech, many business owners feel that not enough is being done and they are still drowning in red tape.

In his statement Gordon Brown introduced a package of measures to support small businesses, including improved access to finance and a reduction in the administrative burden of VAT.

Yet, Chas Roy-Chowdhury, head of taxation at the Association of Certified and Chartered Accountants (ACCA) believes there is still a long way to go.

?The Chancellor appears to have done little to ease the regulatory burden on small firms. Here was an opportunity to show that he is listening to the problems of the business community who have reams of tax and rules to content with and more in the pipeline - but instead he abolished football pools tax.‘

But there was some good news for small businesses:

An optional scheme will be introduced in next year's Budget under which more than 300,000 small businesses can avoid having to account for VAT on each individual purchase and sale, cutting their compliance costs by up to £1,000 a year

Around 900,000 businesses will be offered improved cash flow and lower compliance costs under other changes aimed at simplifying the VAT annual accounting scheme

And Digby Jones chief at the Confederation of British Industry, is largely supportive. He says:‘Companies are crying out for tax credits for research and development, which will be particularly important to recession-hit manufacturers. But it is crucial that the scheme design is simple enough for business to use and generous enough to make a difference. Mr Brown has today taken a major step towards that ideal by moving away from the original proposal for an incremental tax credit.‘

However, the Institute of Directors said it was disappointed that more was not done. Anthony Goldstone, president of the British Chambers of Commerce says: ?While simplification in the area of VAT and payroll is welcome, more needs to be done to alter radically the cumulative burden of regulation on business.

?The Government is in danger of creating a whole new industry in red tape reviews when what business wants is action,‘ he says.

The Professional Contractors Group (PCG) is taking the Government to the Court of Appeal on 4 December to seek to prove that IR35, the controversial

tax on small, knowledge-based businesses, is illegal under European law.

The original judicial review was held in the High Court in March 2001. The Appeal, which has been funded by the membership of the PCG, will claim

that IR35 contravenes European legislation on two counts - illegal state aid

and a barrier to free movement - and therefore should be scrapped.