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Shadow Minister for Business and Enterprise, Mark Prisk, himself a former freelancer, told Shout99: "“This latest tax raid on MSCs shows this Government neither understands nor cares about legitimate freelancers. What’s needed is a simpler, fairer tax system for the self employed. It’s a change I and my Conservative colleagues are determined to deliver.”
He claimed that Ministers were forced to admit that their actions were about protecting tax revenue and would not be helpful to small companies or freelance consultants.
Mr Prisk has previously been outspoken in his criticism of IR35 and Section 660 - and the impact they have on freelancers.
Losers
During the Budget debate, Mr Prisk told the House of Commons: "It is these small businesses that are the real losers in this Budget. As a result of the changes announced by the Chancellor, small companies face an extra £820 million tax bill from the Treasury. The Budget increases the rate of tax that small companies pay by 3 pence in the pound, and creates a new set of complex capital reliefs. The Chancellor knows all too well that many small companies will not be eligible for those reliefs, or will not apply for them.
Mark Prisk MP |
"Thus most service businesses—such as design agencies, hairdressers, shops or accountants—will be losers. Those companies innovating through contracting-out will also lose out, and even those business that do invest will still be losers under this Budget.
"That is why we will be voting against the Chancellor’s small business tax rises later tonight. They are bad for small companies and bad for the economy.
"Last Wednesday, the Chancellor had a golden opportunity to match his enterprising rhetoric with practical action to help business. He could have set out a balanced view of the strengths and weaknesses in the economy, and explained the long term threats and opportunities. He should have helped small businesses as he helped large firms, but instead he pretended that the Budget was both tax neutral and a tax cut. Instead of simplifying the tax system for all businesses, he made it worse for the smallest. Instead of an income tax cut, we had a tax con.
"Beyond the spin and smoke and mirrors, people can now see what kind of Chancellor this really is: a man whose tax promises cannot be trusted. If he becomes Prime Minister, they will not forget it, nor will they forgive him."
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"The Chancellor may have taken some of our advice on large companies, but he has headed in the opposite direction on smaller companies. He has raised rates and made the system more complicated, so we will be voting against his proposals on small business. After 11 Budgets, six rate changes and a cycle of continuing revolution worthy of Chairman Mao, never mind Stalin, he is almost back where he started on small company taxation, except that small businesses will be paying more tax in a more complex and unstable system."
Regarding MSCs, she said: "The Chancellor has delivered a double whammy with a new tax hit on contractors through managed service companies. "
Legislation
The legislation containing the details of the Budget proposals will begin its Parliamentary passage where each clause will be debated in detail and amendments can be proposed.
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Susie Hughes © Shout99 2007
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