David Jetuah, Accountancy Age, Friday 21 May 2010 at 09:57:00

Calls made to Lib-Cons for protecting small businesses, non-dom clarity andcertainty in the overall tax framework


Firms have flagged up the dangers for small companies, alongside concernsabout entrepreneurs' CGT relief and the complexity of non-dom legislation afterthe Lib-Cons unveiled their official manifesto.

The Conservatives have trumpeted cuts to corporation tax, national insurancereliefs for employers and have promised to look at rules for non-doms, but firmshave

While many large companies will welcome the corporation tax cut to beannounced in the Budget, small companies will lose out from likely changes tocapital allowances according to PKF.

Marios Gregori, tax partner at the firm said: "For companies with annualprofits above 1.5m the expected cut in the headline rate of corporation tax to25% is clearly good news. But less profitable companies will make smallersavings and those with annual profits of less than 300,000 will probably loseout.?

The corporation tax rate for small companies is set to reduce from 21% to20%. So any company currently claiming capital allowances on investments inplant and machinery is likely to lose overall, if they are withdrawn."

During the election Lord Ashcroft revealed his non-domiciled status,reigniting issues of how the government permits some individuals not to pay taxon profits they make overseas.

Tax experts have called for a review of the "unworkable" current rules to becarried out with stakeholders involved at every stage.

David Kilshaw tax partner at KPMG said: "Non-doms will hope that any furtherreview of the tax rules will be on the basis of proper consultation and asensible time frame for any proposed new legislation.

"There may be a grain of hope that this may be a positive development andthat the frankly unworkable current rules might be amended especially thedefinition of remittances by family members and the treatment of non-sterlingbank accounts.

"What we need more than anything is stability not another raft of small-print.?

The Lib-Cons have had to push through their combined plan, which involvedmaking rapid compromises. The profession called for certainty and detail to beprovided now that the blueprint had been finalised.

Mary Monfries head of private business at PwC said: "And though we still waitto hear what the Chancellor will say in his first Budget speech in June, it ishoped that 'certainty in the tax system' will play a part, and would ask thatany changes to capital gains tax do not adversely affect entrepreneurs, andemployee shareholders in growing businesses at this crucial time."

Further reading:

Osbornewarned over hasty tax decisions