Simplifying the tax system is the greatest boost the government could give entrepreneurs. In response to a HM Treasury consultation Tax support for entrepreneurs, leading global accountancy body ACCA (the Association of Chartered Certified Accountants) says entrepreneurs and investors are put off investing in their businesses by tax complexity, administrative costs and the compliance burden.
ACCA welcomes the government focus on supporting entrepreneurs and recognises that many of the existing tax breaks does help the start-up sector.
Gemma Gathercole, strategic engagement lead, ACCA UK, said: “Existing tax support can have a significant impact on available and accessible start-up and scale-up capital. However, we believe more needs to be done not only in removing cost and compliance complexity but in focusing existing schemes on high priority sectors.”
ACCA is also calling on the government to run campaigns to ensure that small business owners are aware of existing tax support. But they need to go further and introduce new tax breaks encouraging reinvestment. Tax supports for entrepreneurs are important to counterbalance the investment risk by both entrepreneurs and investors in early-stage companies.
Joe Fitzsimons, regional lead – policy and insights, EEMA & UK, said: “For instance the government should allow reinvestment of proceeds from business asset disposals directly into pensions. This would incentivise entrepreneurs providing a payback against the risk they have taken. That way business owners could secure a retirement on a par with salaried professionals.”
ACCA is also calling on the Treasury to deal with creeping complexity on tax support for start-ups. For instance, anti-avoidance measures on Enterprise Investment Schemes (EIS) and Special Enterprise Investment Schemes (SEIS) have pushed up the cost of professional advice and the complexity of claiming relief. ACCA says regulated professionals – those bound to uphold the highest ethical standards – could act as gatekeepers to prevent abuse, lowering complexity and cost of compliance. Simplification would also reduce HMRC workload and improve its service levels. Also digitisation of schemes would lower administrative burdens.
Lloyd Powell, head of ACCA Cymru/Wales, said: “This consultation had a narrow focus but a wider review on tax on entrepreneurs would be welcomed. ACCA believes that to nurture growth the government needs to strengthen and simplify the regulatory framework through a programme of tax simplification.”
