|The Government has asked the Office of Tax Simplification (OTS) to examine specifically:
- alternative arrangements for taxing the smallest unincorproated businesses, including the potential for a flat rate tax scheme and
- investigating the case for a tax relief to make it easier for businesses to disincorporate.
The OTS will present its final report on small business tax, covering these issues, ahead of the Budget in 2012.
The case for a form of disincorporation tax releif was mooted in an earlier OTS report. There had been feedback that businesses that wished to stop operating through a limited company encounter tax, legal and administrative barriers that prevent them from doing so.
To reflect this, the Government has asked to OTS to:
- Review the need for a form of tax relief for businesses which no longer wish to operate as incorporated entities;
- Explore possible forms for this relief, with regard to interaction with other legislation and the protection of other interests, including creditors and the Exchequer;
- Quantify the number of businesses that could adopt this relief and the potential cost to the Treasury;
- Develop recommendations for a disincorporation relief, if a case is identified for it.
The Government has told the OTS that the review should also have regard to financial implications and the concept of a single person new entity currently under consideration by the Department of Business, Innovation and Skills (BIS).
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Susie Hughes © Shout99 2011