Call for tax 'kick-start' for the SME sector

Action over corporate tax is urgently needed to kick-start the SME sector due to the lack of availabile credit, according to those caught up in the financial storm.

Speaking at the CBI tax conference, Anne Duncan, chief executive of marine development company YellowFin, said that, while SME's are not seeking a separate system of corporate tax, change is needed.

'The one-stop shop strategy doesn't work for innovation. Do SME's require different treatment? Most definitely,' she said.

Duncan said corporate tax rates are too high and the increasing amount of changes to the tax structure is an unnecessary burden to business.

A growing consensus shows the UK government needs to be more transparent in consulting and implementing changes to the system, and Duncan said HM Revenue & Customs needs to start working in partnership with business and not as an adversary.

'A long term strategy would help. We don't want any surprises,' she said.

Judith Freedman, professor of taxation law at University of Oxford, said while it's not possible to design a system of corporate tax without considering SME's, a separate rate would create too many barriers.

'SME's have to be part of the initial design. It can't be a case of get the large firms sorted then deal with the small firms later,' she said.

Despite concerns expressed by small business, Freedman said areas of PAYE and VAT are higher compliance burdens to an SME. In addition, compliance with employment law is seen as more cumbersome and costly than tax.

Chaz Roy-Chowdhury, head of taxation at ACCA, also said a lack of transparency is hindering growth of small business and that a more flexible approach is needed.

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