The managing partner of West accountants Bishop Fleming has a simple, one-word recommendation for what Chancellor George Osborne should do in his Autumn Statement next month – nothing.
Matthew Lee believes if the Chancellor, pictured, is serious about ensuring the economic recovery takes hold and benefits business then he should resist the temptation to introduce new measures and tinker with taxation on December 5.
Also today Business West, which runs Bristol Chamber of Commerce, is calling on Mr Osborne to freeze business rates for two years and launch an extensive review to completely reform the business rates system by 2015 and replace it with a more responsive and transparent system.
Mr Lee said: “He would do every business a favour by freezing any legislative changes to business for five years, to give everyone a chance to catch up with the dizzying array of changes over recent years.”
With the prospect of the Chancellor doing nothing highly unlikely, Mr Lee believes he could instead implement the recommendations of his own Office for Tax Simplification (OTS).
“It really is time to stop talking about tax simplification and getting on with all the obvious ways of simplifying our grotesquely complicated tax system,” said Mr Lee.
If the Chancellor feels the need to announce more changes, Mr Lee suggests the following:
- Scrap the auto-enrolment pension project. It won’t work and it won’t deliver worthwhile pensions: far better, simpler and cheaper is to increase National Insurance contributions by 3% – ring-fenced to boost state pension payments.
- Listen to the business community, rather than the Treasury, and grasp the nettle of reforming business rates – an iniquitous imposition on UK businesses.
- Recognise that NIC contributions provide an easy way to do so much good: exempting employers from NIC payments for workers aged more than 65 should be obvious, while exempting employers’ NIC payments for apprentices and trainees will boost employment.
- Put an end to all those dubious tax-avoidance schemes by getting HMRC to move more quickly: they should be approving or disapproving those schemes from the outset – not leaving it for ‘investors’ to wait for a decision after they have been persuaded to participate in one of those schemes. Taxpayers deserve to know, in advance, what is permissible.
- Scrap the family allowance changes that have pulled thousands of people into the net of having to do a tax return and created a poverty trap for some people where the effective tax rates are over 70%, and achieve long-term savings by scrapping for children born after 2015.
- Scrap Gordon Brown’s complex tax credits that are causing chaos, with millions of pounds given out incorrectly to people who then cannot afford to repay it. It costs a packet to administer and most people have no idea how it works. Swapping allowances between spouses would be fairer and very simple to administer.
- Learn from what you’ve already done: another Stamp Duty holiday on property sales will deliver a bigger boost to the crucial housing market than the dangerous scheme to guarantee mortgages that can be used for second homes and trigger another toxic property bubble.
Bishop Fleming has seven offices across the region including Bristol.
Meanwhile Phil Smith, managing director of Business West, which also runs the Bristol Initiative, said there was no question that the business rates system was broken.
“This is a tax that hits companies of all sizes long before they a make profit, and acts as a drag on business growth and investment,” he said.
“Firms across the UK have been crying out for relief from these burdensome taxes for years, but so far their pleas have been ignored. It is cynical to freeze council tax while allowing the pain caused by business rates to continue, and goes against pro-business pledges made by the Government.
“The cost of spiralling business rate bills is without a doubt the most commonly cited issue facing firms’ ability to grow. We have just seen that RPI inflation dropped off in October after a spike in September. But it is the higher figure used to determine the additional tax that businesses pay. Now, firms across the country have reached boiling point, and demand action to reform the system as a whole.
“The Chancellor should use the Autumn Statement to announce a two-year freeze on business rates, along with a root and branch reform of the entire system. We need a new framework that is more flexible, transparent and responsive to changes in the economic environment. We know this costs money, but there is scope to do it within the Government’s fiscal plan. That way, businesses can put more money into driving economic growth, which benefits UK plc far more than the cost to the Treasury.”
