Smaller firms win concession in tax reporting storm
SMALL companies are set to be exempted from controversial tax reporting plans in the latest effort by the new Government to lift their red tape burden.
About 1.3 million small businesses and landlords will not be forced to complete online quarterly tax returns under plans announced by former Chancellor George Osborne last year.
The concession is expected to be outlined tomorrow in a Treasury consultation paper and follows a furious reaction to the original plans.
Under the new proposals, businesses that cannot go digital will not be required to complete the online returns, and a large number of smaller businesses will simply be exempted.
Mike Cherry, national chairman of the Federation of Small Businesses, said: ‘We’ve been engaging with the Government extensively on this and it is good to see they are listening. Removing small businesses and the selfemployed with modest turnovers altogether from the proposals would mean that half of the UK’s 5.4million small businesses would not be affected.’
While announcing the dispensation for smaller companies, Jane Ellison MP, Financial Secretary to the Treasury, is expected to confirm the Government’s long-term commitment to digital tax reporting as a way to ‘make the UK’s tax administration more efficient and straightforward’.
She said this weekend: ‘By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first.’
The tax reporting exemption follows warnings from small businesses that the plans would be ‘a dog’s dinner’. In a letter last December to Sajid Javid, then Secretary of State for Business, Dr Adam Marshall, now acting director general of the British Chambers of Commerce, said the issue of tax administration had ‘risen up the ranks to become one of the principal regulatory complaints received from businesses across the UK Chamber Network’.
A petition under the title ‘Scrap plans forcing self employed & small business to do 4 tax returns yearly’ was signed by more than 100,000 people and debated in Parliament in January.
The concession to small companies on tax reporting follows last week’s announcement that the very smallest companies would also be exempted from paying into the Apprenticeship Levy – another controversial scheme launched by Osborne last year.
Last week the Government confirmed that employers operating in the UK with a pay bill of more than £3million must contribute to a new apprenticeship levy from next April. But it also revealed a key concession for smaller firms.
Ministers proposed that companies with fewer than 50 employees that take on a 16 to 18-year-old apprentice will not have to contribute towards training costs. Those taking on apprentices will benefit from a cash incentive of £1,000 per apprentice. The same sum will go to the training provider.
The Government has offered to pay 90 per cent of the costs of training older apprentices for firms with fewer than 50 employees. It is urging employers and training providers to have their say on the initial proposals.
The call for views comes amid fears, reported in The Mail on Sunday last week, that the Government will miss its target to create three million apprenticeships by 2020 as firms rein in hiring trainees.
Emma Jones, founder of small business support group Enterprise Nation, who was among those at Theresa May’s round table for small business representatives at No 10 on August 4, said: ‘It was a strong start to talks with the Prime Minister and her new team around small business.
‘She is right behind the need for a push to encourage small businesses and start-ups to go global and the need to stay positive in a challenging environment.
‘This is exactly the position we adopt at Enterprise Nation. Let’s trade our way through Brexit.’