At the time of the 2004 pre-Budget report, in December of that year, HM Treasury published a discussion paper on Small Companies, the self-employed and the tax system. After some talk about targeted tax incentives for small business, and expressing the view that everyone should pay the right amount of tax, it went on to suggest that the creation of HM Revenue and Customs presents an opportunity to look at the way small businesses interact with the tax system more strategically. The government believes that this paper provides the starting point for discussion with interested parties, focusing particularly on the strategic issues raised by the approach in the tax system towards self employment and the remuneration of owner-managers of small incorporated and unincorporated businesses.
I recall that at the time I welcomed the paper, suggesting that the government meant what it said and that it wanted to hold a dialogue with what it probably called its stakeholders. And indeed it seemed to be so, with the original Administrative Burdens work going ahead, and with consultation documents issued in March 2005 (Working towards a new relationship), November 2005 (Making the new relationship a reality), and March 2006 (Progress towards a new relationship). For much of the time it seemed at least that the government was talking the talk.
Now there has been progress in some areas (if overshadowed by the disasters in delivery): but what has happened to the focus on the strategic issues? It is apparently clear that the review is over and possibly conclusions have been drawn, but neither the evidence submitted nor any statement about what is to or has been done has ever appeared in print.
The Chartered Institute Of Taxation (CIOT) has sought to know what happened by requesting the details under the Freedom of Information Act, but has for the moment been knocked back. There was a story that a Treasury official, asked about this, said that indeed the submissions had been looked at, and the final result was the increases in the small companies’ CT rate announced at Budget time.
So has it been shelved in the “too difficult” storage at the Treasury, together with any sensible approach to the domicile issue and the adoption of the Gregorian calendar for tax purposes (a matter on which perhaps we should consult the Scots, who after all realised that the New Year began on 1 January some 150 years before the rest of us)?
Attention seems to have switched from the NIC avoidance available through limited companies to the rather limited avoidance available by income shifting, and the search for the mythical level playing field seems to have faded away. It may be, of course, that it didn’t slope that far to begin with.