Institute of Chartered Accountants, Yorkshire & Humber Region (Press Release), Wednesday 6th December 2006.

ICAEW responds to detail in the Pre-Budget Report

Duncan Meredith Senior Tax Consultant

In response to today’s Pre-Budget Report (PBR), Duncan Meredith of Garbutt & Elliott, Chartered Accountants & Business Advisors, York, has said that whilst government is addressing some of the issues concerning business, a large part of the business agenda has been left untouched.

Duncan said “The Institute of Chartered Accountants in England & Wales (ICAEW) recognises and welcomes some of the announcements the Chancellor has made, particularly around skills, transport, globalisation and the reduction of current regulation, but actions speak louder the words. Despite ten pre-budget reports, the Institute is disappointed that Gordon Brown has not delivered a more simplified tax system – essential for business confidence. The fact that some of the tax legislation is now so complex that even HMRC staff have difficulty working with it is an indication of the scale of the problem.

“The ICAEW will continue to press the case for radical simplification both in the tax system and the amount of regulation that continues to fall on small business.”

“However, there should be credit given for the very benign climate for business over the last ten years which has offered an opportunity for economic stability and growth.”

The Institute’s initial response to specific announcements within the Chancellor’s Pre-Budget speech includes:

Green Taxes
Frank Haskew, Head of the ICAEW Tax Faculty, said: “We are pleased that the chancellor has recognised taxation is not the sole economic tool to change behaviour with regard to climate change. Balancing green taxation with positive fiscal incentives to encourage individuals and businesses to embrace the green agenda such as the elimination of stamp duty on 0% carbon homes is to be welcomed.

“The desire to make the City of London a global centre for carbon trading is to be encouraged. Together with encouraging permit trading, this will have the double dividend of tackling climate change and further enhancing the UK economy. We look forward to playing our part in the Chancellor’s discussions on creating the infrastructure to achieve this.”

Simpler Tax System
Ian Young, Technical Manger at the ICAEW Tax Faculty, commented: “Tackling avoidance isn’t the only way to achieve certainty and equity in the tax system. The issue of complexity must also be addressed. Simpler tax law engenders respect from taxpayers and encourages compliance. Finance Acts are now three times bigger than they were 25 years ago and in the current decade Finance Acts have, on average, been 70 per cent bigger than they were in the 90s.

“The creation of a single customer record for businesses could help – but there is also danger of adding another layer of bureaucracy if it’s not done in the right way.”

Enterprise Policy
Clive Lewis, Head of SME Issues, said: “The chancellor recognises the threats and opportunities of globalisation. Our enterprise survey showed that nearly three quarters of businesses have customers abroad. Responding to the competitive challenge of the far-east has to be a short term priority for government if long term economic stability is to be assured.

Better Regulation
Clive Lewis, Head of SME Issues added: “The government hasn’t released figures for the total administration burden of current regulations across government. Nor have they done anything to engage with businesses on reducing the costs of new regulation, which according to our enterprise survey is £7.7 billion, three quarters of which falls on businesses with less than ten employees.” 

Reduction in HMRC workforce
Anita Monteith, Technical Manager at the ICAEW Tax Faculty said: “We want to see a world class tax administration system in the UK. We are concerned that the reduction of HMRC’s workforce by at least 10,000 will impact greatly on front line support to business and individual taxpayers as they struggle with an ever more complex tax system.”

Skills
Clive Lewis, Head of SME Issues at the ICAEW, commented: “Everybody knows the competitive challenges facing the UK if we do not address the widening skills gap. We welcome both the Chancellor’s commitment to working in partnership with employers and the appointment of Sir Digby Jones to lead on this initiative. The ICAEW’s recent Enterprise Survey has shown that lack of specialist, managerial and leadership talent is a major barrier to UK growth right now.”