19th March 2008
Small firms 'need 21st century legal entity'
The limited company system needs to be replaced for small businesses, a group of MPs has said.
In an early day motion (EDM) presented to Parliament, MPs led by David Drew urged the Treasury to undertake a thorough review of how small businesses are regulated.
The motion argues that the limited company model, established in the 19th century, is inappropriate for the needs of small modern businesses, and that it should be replaced with for a new, "21st century" legal entity.
A new model could, they argue, "simultaneously reduce the taxation, accounting and regulatory burdens on smaller enterprises, so freeing them to generate wealth and employment in the UK economy".
The EDM calls for the review to take place in the time afforded by a delay to new rules on income shifting. The Forum for Private Business (FPB), which lobbied the government to drop its plans on income shifting, welcomed the EDM.
"With the tax burden on smaller firms due to be increased in April, businesses have now been given a little breathing space," the FPB's chief executive Phil Orford told More Than Business News. "The FPB is supporting Mr Drew's statement that HM Treasury must now launch a review and consider alternatives to the ending of income shifting."
He added: "Small businesses are already being hit hard. The latest Small Business Research Trust (SBRT) survey of small businesses has found they are now struggling more than ever. Trading conditions have declined in the first quarter of 2008. Therefore changes to income shifting need to be seriously considered to prevent more firms from closing down."
In an early day motion (EDM) presented to Parliament, MPs led by David Drew urged the Treasury to undertake a thorough review of how small businesses are regulated.
The motion argues that the limited company model, established in the 19th century, is inappropriate for the needs of small modern businesses, and that it should be replaced with for a new, "21st century" legal entity.
A new model could, they argue, "simultaneously reduce the taxation, accounting and regulatory burdens on smaller enterprises, so freeing them to generate wealth and employment in the UK economy".
The EDM calls for the review to take place in the time afforded by a delay to new rules on income shifting. The Forum for Private Business (FPB), which lobbied the government to drop its plans on income shifting, welcomed the EDM.
"With the tax burden on smaller firms due to be increased in April, businesses have now been given a little breathing space," the FPB's chief executive Phil Orford told More Than Business News. "The FPB is supporting Mr Drew's statement that HM Treasury must now launch a review and consider alternatives to the ending of income shifting."
He added: "Small businesses are already being hit hard. The latest Small Business Research Trust (SBRT) survey of small businesses has found they are now struggling more than ever. Trading conditions have declined in the first quarter of 2008. Therefore changes to income shifting need to be seriously considered to prevent more firms from closing down."
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