Fiddling while Rome burns
The Government has made no secret that one of the planks of its economic policy is to drive up production and employment by trying to create more small businesses. One way it is trying to achieve this is though its 'enterprise for all' policy by targeting the areas which are currently under-represented in small business.

While the objective of this is commendable, it strikes me that it is akin to 'fiddling while Rome burns'.

Turmoil
At the moment, the entire small business community is in turmoil. Representative groups, professional bodies, advisers and small businesses are united in their complaints about the uncertainty which permeates through any attempt to run a small business.

This is not sector specific. Freelancers in the knowledge-based community have to run the gauntlet of contradictory decisions relating to IR35; married couples don't know if a tax bill for £42,000 is going to hit their doormat because of Section 660; small building firms are concerned that the people they thought were sub-contractors could now turn out to be employees; a zero corporation tax break introduced by the Government to encourage small business turned out to be a 'loophole' which needed closing 18 months later because people actually took advantage of it; and every small business, particularly those who are in a position to employ someone, are being strangled by a mountain of red tape and bureaucracy.

However, it seems ironic that when established small businesses and everyone with any involvement in the sector are crying 'foul', the Government continues to promote a policy to encourage under-represented groups to enter the lion's den.

'Real business'
The Treasury seems to have a definition in its own mind of a 'real business', but is reluctant to share this with the rest of us.

It seems that the Government doesn't think you are a 'real business' if you:

• sell your knowledge;
  
• enter into business with your spouse;
  
• take profits from your company rather than reinvesting them;
  
• have no desire to grow and employ others;
  
• are an owner-managed one man band.

It is this final category which will come under the spotlight later this week (December 2) when Chancellor Gordon Brown publishes a discussion paper in the Pre Budget Report relating to the tax treatment of owner-managers and specifically how they are remunerated.

It will be recalled that it was in the Pre Budget Report 12 months ago that Mr Brown trailed (in paragraph 5.91) a measure 'to ensure that the right amount of tax is paid by owner managers of small incorporated businesses on the profits extracted from their company'. This eventally led to the so-called dividend tax and the abolition of the zero corporation tax band for distributed profits.

Goal posts
Mr Brown may well think small owner-managed businesses are still not paying 'the right amount of tax', but there remains no clear definition of what the 'right amount of tax' is. And consequently, the goal posts keep moving - in some cases even after the ball went in the back of the net several years ago.

Advice
It would be interesting to know what advice and support one of the Phoenix Fund projects will give to an ex-offender with a business proposal to:

• start his own IT contracting company;
  
• go into business with his wife;
  
• had no plans to expand;
  
• and had the good fortune to already have been offered a 12 month contract from a former employer.

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Susie Hughes © Shout99.com 2004