While there is nothing in the Statement to send SMEs into frenzies of delight, there is nothing (in most cases, and with one notable exception) to cause paroxysms of despair either; and a few things which may help out a little. Employers’ NIC is abolished (from April 2015) for workers under 21; but I do wonder, in the light of recent publicity about poor educational standards of the young, if that will be enough to bribe employers to take on younger workers. Modest increases in the limits for SIPs and SAYE share schemes (from April 2014) marginally improve the attractiveness of these schemes but are not game-changing, though altruistic SME owners with no younger generation to inherit the business may find some attraction in the 3 new tax reliefs designed to encourage indirect employee ownership through the medium of employee ownership trusts.
The package of changes to business rates will be especially welcomed by beleaguered high street traders; these include the discount of £1,000 for small retail and catering premises; 50% re-occupation relief for businesses moving into retail premises which have been vacant for a year or more; and the extension of small business rates relief to qualifying businesses taking on an additional property.
The welcome conclusion of the consultation on close company “loans to participators” is that none of the proposed changes will be adopted in the immediate future. On the other hand the outcome of the consultation on taxation of partnerships will be unwelcome: the scope of the draft legislation is unclear but potentially seems to go further than was foreshadowed in the consultative document, extending not only to “mixed partnerships” as expected but also in some cases to pure “corporate partnerships”; certain aspects of the changes take immediate effect. For a more detailed briefing on corporate partnerships, click here.
Interestingly, the documents issued at the time of the Statement do not seem to refer to the separate proposal in the consultative document to treat certain members of LLPs as if they were employees. It would be too much to hope that that proposal (actually a comparatively sensible one) has been dropped: one assumes that further detail will follow.
The crackdown on avoidance and deferral continues apace: first, a taxpayer who declines to accept that he is bound by the outcome of a “test case” and litigates independently will be at risk of a penalty should he, too, lose: and, flushed with success in the Cotter case, the “pay now, litigate later” mantra of HMRC is to be backed by law in avoidance cases. Finally, hot on the heels of their FTT success in Boyle on “offshore contractors”, HMRC will be strengthening existing legislation dealing with employment via “offshore intermediaries” (essentially agencies) from April 2014.
Final thought: there are fewer than three weeks to go to Christmas. Yet the Chancellor insists that this is his “Autumn Statement”. Should we be worried that this man is out of touch, wildly optimistic or simply temporally challenged?
