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Finance Bill does little for small companies, says ICAEW chief

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Small businesses are ‘tomorrow’s Dysons and Microsofts’ and they need government support ‘as much if not more than the big businesses that have already made it’, ICAEW Chief Executive Michael Izza has said. The ICAEW’s verdict on the Finance Bill was that it would help large companies and international competitiveness but do ‘little for SMEs’, Izza wrote last week on his ICAEW blog.

The ICAEW Tax Faculty said in a submission to the Commons Treasury Committee that large companies would benefit from the current Finance Bill ‘much more’ than small companies. ‘Pro-competitive measures’ including corporation tax rate cuts and the ‘patent box’ would help bigger organisations, the Faculty said.

‘But small businesses account for 99% of all enterprise in the UK, and 58.8% of private sector employment,’ it noted. They would not be helped by the reduction in the main rate of corporation tax.

Izza said the reform was ‘great’ for large companies, for multinationals, and for intellectual property: ‘But it does rather skip over small businesses.’ He quoted a number of representations received from owners of smaller businesses. ‘We should be asking the Chancellor to reverse his reduction in capital allowances,’ one said.

Budget 2012 announced an additional reduction in the main rate of corporation tax. The rate fell from 26% to 24% in April 2012 and would fall to 23% in April 2013 and 22% in April 2014, the Treasury said. David Gauke, the Exchequer Secretary, noted at the CBI’s recent launch of its ‘Tax and British business: Making the case’ campaign that by April 2014 the main rate would be ‘within touching distance of 20%’.