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I raised this in my budget circular to clients, if you look at the % of GDP CT receipts are, its falling, and seems entirely due to this policy.
The claims that somehow this attracts head offices to the UK and so we make more in tax overall seems completely wrong. CT rates should be 30%, not 17%, and corporate would barely notice. The big ones would still stuff all their profits off shore unless HMRC properly challenges them using existing rules and the smaller ones would have no choice but to pay more.
The lack of CT receipts is the easiest place to raise revenues, unfortunate with senior ministers (like Gideon) on the back pocket of large corporates, and the media controlled by large corporates, and the BBC muzzled by politicians, and the lack of an effective opposition party at Westminster it is hardly surprising to see this missing from any public debate.
So, discard the Laffer Curve?
Reality of 30% and dividend tax is the really small ones would all disincorporate their business and fold their companies, the tax losses to the Treasury from them not paying final corporation tax , snaffling it all as capital distributions/dividends with no real enforcement to chase the directors post event would punch a nasty hole in the forecasts.
What in my opinion is needed is a distinct small business entity with its own particular tax rules/compliance rules, so that legislation can in future be better targeted to the SME sector rather than one size fits all tax legislation/accounting requirements etc; dumping (integrating) NI would be a real start.
Relevant legislation re this new beast would be brief and much simpler; maybe only taxed on vat and what withdrawn rather than profits/gains, who knows.
This is what should be on the mind of the Government rather than MTD- catch is the project would need real graft and thought ( in short supply) and would not be exciting!!!
I am in favour of having such an entity - it could get rid of IR35 as well and the Employment Allowance for NI! Say for businesses up to £150K turnover?