It has called on the Treasury to use the additional year's delay that they announced in the Budget to undertake a thorough review of finding a more appropriate means of providing small businesses with with a more suitable for the 21st century.
The Early Day Motion was tabled by a cross party group of MPs led by Labour MP for Stroud, David Drew.
The move was welcomed by professional tax body, the Chartered Institute of Taxation (CIOT), who were among the many groups objecting to the original proposals.
When the first petition was tabled the CIOT said that it had long been of the view that fundamental reform to the structure of small business taxation was necessary if small businesses were to be able to plan their tax affairs with any degree of certainty.
The second EDM says: "That this House... calls on HM Treasury and other affected departments to use the additional year that they have allowed themselves for consultation on this issue to undertake a thorough review of more appropriate means of providing smaller enterprises with a suitable legal entity designed for use in the 21st century, and not the 19th century as the limited company was, that will simultaneously reduce the taxation, accounting and regulatory burdens on smaller enterprises, so freeing them to generate wealth and employment in the UK economy, whilst ensuring that they can with minimum effort comply with the taxation and other requirements imposed upon them by law in a way that minimises risk of tax avoidance, creates a level playing field in which all in the sector can compete fairly and ensures that the right person is taxed on the reward they have earned at the right time and in ways which do not create artificial and inappropriate incentives to recategorise employment as self-employment, and the reward for labour effort expended as investment income."
Rob Ellerby, CIOT President, said: "The MPs who tabled this motion are right to say that by extending the process for another year, the Government has given itself a great opportunity to think through the issue more fundamentally with a view to coming to a better answer."
The first EDM received 175 signatures from MPs after being started by the Liberal Democrats. (See: MPs start 'income shifting' petition - Shout99, Jan 2008). The second EDM was started has been signed by 18 MPs to date. The full text and those MPs who have currently signed can be viewed here.
Shout99 has followed the events relating to Section 660 and income shifting. You can also read more about the background to this case and the issues at stake in Shout99's Section 660/Income shifting resource centre.
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Susie Hughes © Shout99 2008