The Forum of Private Businesses is opposed to the plans of a number of councils to introduce a tax on companies that provide parking for employees.

A workplace parking levy was given the go-ahead in Nottingham last year and at that time the FPB expressed concerns that this scheme would be introduced by other towns. It seems that this will now become a reality. A spokesman for the FPB, Chris Gorman, says the WPL is a stealth tax which small businesses and contractor accountants will struggle to pay.

If an employer has more than 10 staff parking spaces they will face an annual charge of up to £250 for each space and this could increase to £350 in two years. Companies have the option of whether or not to pass the charge to the employees.

The labour government introduced the scheme a year ago but it was hoped that the coalition would abandon it. However, councils such as Bristol, Leeds and York are now actively giving it consideration. In London, Cambridge, Milton Keynes and Oxford councils are examining the idea.

The workplace parking levy is meant to discourage motorists from driving into towns and encourage them to make use of public transport to ease city centre congestion but opponents of the scheme fear councils will simply use it as an alternative revenue making measure in the face of the government’s austerity drive.

It is thought that the WPL will be both easier and cheaper to collect than city congestion charges as it will not affect shoppers and motorists who are not driving into cities for work.

Nottingham council is still hoping to push ahead with its planned scheme, after a five day public examination which will start on October 1st, and if approved it will come into force later this year at a rate of £185 per employee parking space.

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You may recall a while back that Arctic Systems was major news. A case that was taken all the way to the House of Lords where, to the great relief of many, HMRC’s assertion that a husband and wife could not share the profits of their company was comprehensively thrown out. S660a does not apply between spouses; end of. So I was more than a little surprised to read this week that HMRC had just lost another S660a case on appeal.

So just what the hell is going on?

The difference between Arctic and this later case – Pattmore vs HMRC – is to a rational mind utterly trivial. Whereas in Arctic the shares were identical, in Pattmore they were non-voting shares. In other words, they were purely a source of income for the spouse. This, it seems, warrants prosecuting the Pattmores under S660a and demanding they pay £20,000 more in taxes.

Luckily, the judge at the Tier 1 Tribunal ruled that the circumstances of the share ownership did not fulfil the criteria for an S660a settlement. Therefore Mr Pattmore was not liable for the tax HMRC said he owed on Mrs Pattmore’s dividend income. Gosh, who’d have thought it…

OK, so good news for the Pattmores, but slightly more worrying news for the rest of us small businesses. That HMRC feel they are justified in pressing this case in the face of a very solid ruling from the highest court in the land almost beggars belief.

I don’t know about you but I thought that HMRC’s duty was to collect taxes owed in line with the legislation in place. Not to chance their arm pressing a case that any sane person would have thought impossible to win, and one that would seem to be vindictive at best.

However that is not the only concern. In the last budget, Osborne raised the spectre of a General Anti-Avoidance Rule, or GAAR for short, which aims to simplify the boundary between acceptable and unacceptable avoidance. Now this might be something worth doing if it is to be applied consistently and fairly and if the boundaries are clearly defined. The bit that worries me is that phrase “applied consistently”: I really don’t have a lot of faith that an organisation that would bring the Pattmore case should be entrusted to apply what would be a largely subjective assessment. And come to that, an assessment that almost certainly would be disputed and so need a court case to establish the answer. Déjà vu, anyone?

And finally, just to confuse things even further, there are mutterings in the press about HMG relaxing their stance on avoidance in general. No idea what that means yet, but we will no doubt find out soon. If true, it would be welcome; there are far more worthy targets than UK’s 4.2 million freelance workers.

But the obvious conclusion to my mind is that Mr Osborne needs to look at the mindset of HMRC very carefully before he starts giving them something as potentially dangerous as the GAAR to play with. Hector needs to re-learn what he is there to do. Chasing un-winnable cases is not it.

Alan Watts can found at LinkedIn.
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Contractor accountants and small businesses could benefit from a new invoicing directive from the Council of the European Union.

The new system, which will simplify VAT invoicing processes, must be in place by 2013. At that time, tax authorities must accept and handle electronic invoices in the same way as the current paper documentation.

Electronic invoicing experts at Deloitte welcomed the announcement saying that computerised financial systems already store invoice documentation securely and so it makes sense to acknowledge the new technology is secure when it comes to tax audits. However, they would prefer to see the directive implemented before 2013 if possible.

The UK and the Netherlands already have a system whereby companies can make arrangements to make sure all the necessary procedures have been followed in order to produce a correct tax return.

The directive also contains anti-fraud measures and deadlines for the issuance of invoices which are aimed at speeding up the exchange of data on intra-EU supplies of goods and services.

The European Union will also need to provide new standardised instructions regarding the archiving of accounting documents. Currently, UK companies and limited company contractors must retain e-documents for at least 6 years but other member states have different retention requirements.

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Image: 088.365 – March 29, 2010 by meddygarnet

Contractor accountants should take note that the CBI warned recently that although the economy has been showing signs of improvement, challenges and uncertainty still lie ahead.

The comment came after the Bank of England decided to maintain the historically low interest rates at 0.5% last week.

The head of economic analysis at the CBI, Lai Wah Co, said that although the move was widely expected, there is growing disparity amongst members of the Monetary Policy Committee over the strength of the economic recovery.

GDP has increased by 1.1% in the past three months according to government figures but this is expected to slow down during the second half of 2010. The recovery is being supported by an exceptionally loose monetary policy and it may be sensible to move towards gradually withdrawing this monetary stimulus, the CBI expert remarked.

Meanwhile, the majority of the UK’s small businesses and limited company contractors have still not returned to pre-recession levels of profitability. 70% of British entrepreneurs have not seen their profits return to normal after the credit crisis, according to RSM Tenon’s Business Barometer.

9% of entrepreneurs believe they will have to wait for at least another 3 years before their business returns to normal, 20% think between 2 and 3 years and 27% say 1 to 2 years.

Over 40% of entrepreneurs have had to review their business through fears of a double dip recession and 22% think that a lack of cash flow could seriously threaten their operation in the coming 12 months.

The head of recovery at RSM Tenon said that they are expecting to see corporate insolvency levels remaining the same as over the past two years as business owners still struggle to secure additional funding.

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The Reducing Regulation Committee had its first meeting last week and contractor accountants are relieved that something is eventually being done to cut the red tape that has strangled enterprise over recent years.

Vince Cable, the business secretary, is heading the Committee which met for the first time on July 1st. Mark Prisk, the Small Business Minister, Francis Maude, the Cabinet Office Minister and Danny Alexander, the Chief Secretary to the Treasury, are also members of the Committee.

Mr Cable said that the government must give the balance of power back to individuals. Businesses such as online accountants are required to drive economic growth, not spend all their time filling in forms. The Committee wants to change Government culture away from regulation and find alternative ways of solving problems.

In future, all proposed regulations will have to be stress tested by the Committee and only those which are deemed high quality and priority will be allowed to proceed. There will also be a one-in, one-out system so that businesses will not be burdened by excessive regulations.

The first meeting coincided with the launch of a new government campaign called Your Freedom. Limited company contractors and individuals are invited to tell the government which of our current laws and regulations they would like to see abolished.

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The FPB has expressed its approval of the business friendly emergency budget, saying that it contained various key victories for small businesses such as smaller contractor accountants.

The 1% reduction in small companies’ tax was a positive measure, as was the £5 million threshold for relief on capital gains tax (CGT) for entrepreneurs and limited company contractors.

The Forum thinks that the government demonstrated its appreciation of the issues relating to small businesses by extending the Enterprise Finance Guarantee scheme, continuing the tax breaks for holiday let properties and abolishing back-dated business rates.

The full budget document pledged to review recruitment and employment law and this was something the FPB had called on them to do. Forum members often cite employment regulations as a major area of concern so any measures to simply the law will be welcomed.

Phil Orford, the FPB chief executive, believes owners of small businesses would have been pleasantly surprised by the budget.

On the subject of the impending VAT rise, Orford said that although this will have an impact, he thinks the majority of Forum members would rather this outcome than an increase in other taxes or a further reduction in public spending.

The FPB will now be calling on the government to give a guarantee that it will provide genuine private sector input to help boost local economic growth, especially in those areas that will suffer from public sector job cuts.

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After 10 years of beating our collective heads against a brick wall, there is a clear commitment from the Government to do something positive about IR35. Right there. In the full manifesto. In actual black and white. Forgive me while I indulge in a loud cheer and a large whisky.

Of course, we don’t actually know the details, such as when. Also, a lot of the tax plans are based around the Lib Dems’ ideas, which include worryingly non-specific threats to address avoidance. Sure you don’t mean tax evasion, chaps, I mean that’s the illegal one, isn’t it? Whereas avoidance is not only legal, but was actually condoned in the House of Commons back in the 20s.

On the other hand, of course, the Conservative side of the side of the House (if you see what I mean) are talking loudly and clearly about helping small businesses. Let’s just hope the two cancel each other out and we get some sense.

To be fair, I like what I’m hearing from the new Government. There is a clear sense that they want to unwind a lot of the major stupidities of the last 13 years (and let’s face it, there are plenty to choose from!), so I’m mildly hopeful. Even if IR35 itself isn’t deleted but wrapped up in a sensible set of criteria that we can all understand, that I could live with.

On the other hand, the Public Sector looks to be in for a hammering, (although the commercial job market seems to be taking off big time), with talk of serious budget cuts across the board. I’m taking a close interest in all this of course, mainly because the current contract is about to stop and I need to be looking for gainful employment again. I have actually had a positive response but, as is the way of such things, that was a week ago and it’s all gone quiet again. Also it’s hard to job hunt when you’re working. The basic approach is to find the role, rearrange the CV to highlight the relevant bits of your vast experience so the agency will see that you can do the job, mail it in, wait about ten minutes then phone them up and do the sales pitch – if you can catch them, of course, which isn’t always possible. Usually isn’t, in fact…

Except you can’t really do all that three times a day sat at your desk in an open plan office. Especially when you’re the boss. Hence I’ll be taking a week off soon and hitting the phones in anger.

Know anyone wants some Services Delivering?

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