ACCA's response to the Pre-Budget speech
Chas Roy Chowdhury, ACCA Head of Taxation said: "Overall, the Chancellor's pre-budget report will have left the country's small businesses confused and uncertain."
Anti-avoidance:
"There appears to be a whiff of retrospection about the government's intentions here - it says that 'where the government becomes aware of arrangements that frustrate its intentions it will introduce legislation to close them down, where necessary from today'. So presumably if they 'discover' such a scheme in three months time, it will be invalidated from 2 December 2004 and therefore, the Revenue could demand any tax due to be repaid from that date.
"Quite a few of the schemes it makes mention of are to do with NIC. The government should realise that rising tax burdens generate avoidance. The recent introduction of a registration system is now seeing many schemes being blocked. If the government is not careful we will end up with a US-style situation where some companies factor in fines to their tax avoidance arrangements."
Extension of maternity leave:
"The decision to make maternity leave transferable from mothers to fathers is a step in the right direction for flexible and family-friendly working, but it increases uncertainty and potentially the administrative burden, for small business owners. There will also be training implications for businesses - increased eligibility will increase the probability that cover will have to be arranged, and hence higher overall costs. If paid leave is to be transferable without restriction, firms will incur significant costs and inconvenience."
Flexible working:
"Proposals to extend the right to flexible working arrangements for parents with children over six years old, but not for non-parents could, potentially, lead to a 'two-tier' workforce. Such diverging rights could result in employee tension and resentment."
He added: "What small firms need is certainty, to allow them to plan ahead and spread the time and cost implications of any changes they may have to make. The changes should have minimal administrative consequences for businesses and not add to their already significant red tape burden."
Extension of ISA limits:
"Given the pensions crisis, the extension of the current ISA limits for another seven years is a welcome incentive to save. However, the Chancellor's previous decision to lower the limit should never have been mooted in the first place."
National Employer Training Programme:
"Although we welcome the National Employer Training Programme, this new scheme must take the particular needs of small businesses and their employees into account. For example, introducing inappropriate demands or criteria into the Programme would be a waste of time and resources and to the detriment of all involved. Recognition, for example, of the less formal, but equally as valuable, in-house training conducted in small firms is essential. Business must be fully consulted".
Child Trust Fund:
"Extending the child trust fund to allow seven year olds to receive a supplementary payment is welcome, but ACCA would like to see eligibility for allowance extended further, to allow contributions for all children under 18 into the trust - not just those born after 1 September 2002."
Newly merged Inland Revenue and Customs & Excise:
"Although welcoming the establishment of a small business unit in the newly merged tax body, a new focus on tax advice, not inspection and, the introduction of single tax accounts, ACCA remains concerned that Customs' traditionally more draconian investigative powers may be used for direct tax issues."
Council tax savings via ring fencing:
"The Chancellor's announcement of £1bn in extra revenue to 'reduce pressure on council tax' to be partly financed by a 'reduction in ring fencing' is questioned by ACCA. Just how efficient a mechanism will this be to reduce financial pressures on local authorities?"
For more information, call:
Chas Roy-Chowdhury, ACCA Head of Taxation 020 7396 5796/07710 707516
Ian Welch, ACCA Head of Corporate Communications 020 7396 5729/07739 862928
June Deasy, ACCA PR manager 020 7396 5751/ 07736 800393