The Chancellor has challenged business. He has challenged it to invest, to export, to build the economy.
In return, he has set out the further actions the government will take, in order to help to build the appropriate environment. These are:
- a stable economy
- a fairer, more efficient and simpler tax system
- reforms to support growth.
So has business received the help it needs?
There are some encouraging announcements. As part of the corporate tax 'road map' we have corporation tax being reduced by an additional unplanned 1% down to 24%, with the plan to bring the rate down to 22%.
There are improved finance measures for exporters, a new investment scheme aimed at investment in small business called the Seed Enterprise Investment Scheme, R&D enhancements and the announcement that the government will take forward the measures in the Breedon review. We also have reliefs to turn the UK into a technology hub and a re-push of the enterprise zones – will they be a success?
However, along with the announcements, there are areas that increase uncertainty. But we will have to wait for the detail on these. We have consultations on a new cash basis for tax for small unincorporated business with under £77,000 turnover and the proposal that they can grow to £150,000 before they have to switch – another consideration for the smallest businesses when considering incorporation verses non incorporation.
A proposed future consultation on disincorporation is expected in the next couple of months and there is also the prospect of a general anti avoidance measure (GAAR). As usual, the devil will be in the detail.
It was also announced that a package of measures will be introduced to tackle avoidance through the use of personal service companies and will aim to make the IR35 legislation easier to understand. This will include HMRC strengthening specialist compliance teams, simplifying the way IR35 is administered, and consulting on proposals which would require office holders/controlling persons who are integral to the running of an organisation, to have PAYE and NICs deducted at source. The new rules should be introduced in Finance Bill 2013.
This will be difficult and we believe a clear and simple system is required. IR35 has introduced a lot of uncertainty into the legislation. One of the basic principles of legislation is that it should be certain.
What we need are clear answers to the following questions:
- is the balance right between risk and reward in the UK?
- do we have a business friendly environment?
- how you can make sure you get the right people, with the right skills for your business and how have you made sure that you develop together?
- how can you arm yourself with business information and knowledge and where you can get it?
In answer to the last question, ACCA will highlight where you can access the information you need. For example, if you want to know more about how to prepare your business for exports take a look at our latest vodcast, due soon. In it David Smith, a lecturer and business consultant, answers questions on achieving business growth and the challenges of the export market. David will provide practical advice and answer questions that will include:
- why would any business want to consider exporting when they haven’t done so before?
- how easy is it to consider exporting?
- what should a company do before starting to export?
- what business models are available to conduct export business?
- where should a company consider exporting to?
- how should a company go about exporting?
- what are the big risks and pitfalls for a new exporter?
- what help is available to an inexperienced exporter?
You can see a preview of the podcast and you can also find additional guidance and support.
Andrew Leck – head of ACCA UK