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Chancellor asked to listen to family businesses too

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15th Feb 2008
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The chancellor, Alastair Darling, has been told to pay as much attention to family businesses as he has done to those who forced a u-turn over the government's new policy towards wealthy foreign workers.

The Professional Contractors Group (PCG) made the demand saying that Darling's proposed outlawing of 'income shifting' by small companies is just as controversial as those reforms proposed for non-domicile individuals.

The call came after pressure from the City forced Darling to water down his crackdown on wealthy foreigners living in the UK.

Under the government's income shifting tax proposals small businesses owners may have to account for every single contribution they make to the company.

PCG managing director John Brazier said: "It would be a terrible irony if Mr Darling was only willing to listen to the very wealthy at the expense of hard working UK families.

"PCG, leading tax experts and a range of other representative bodies have expressed their dismay at the ill thought out proposals which will place an enormous burden of red tape on small family business.

"Hard working ordinary people will be forced to jump through yet more hoops and the burden on small businesses simply to justify their very existence to the tax man will be huge."

Although Darling has been criticised for caving in over the non-dom legislation, PCG said it believes there is a glimmer of hope for the hundreds of thousands of small businesses who would be hit by the family business tax.

"Last month the chancellor changed plans for a flat rate capital gains tax," Brazier added. "Now he's prepared to listen to critics of the non-dom tax so we must assume that Mr Darling will give the same credence to critics of the family business tax."

Both the Conservative party and the Liberal Democrats are opposing the government's income shifting proposals, and backbench MPs have been signing an Early Day Motion requesting reconsideration of them since January.

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