Lloyd Powell, Head of ACCA Cymru Wales has issued the following statement on today’s Mini Budget:
Government Plan for Growth
“Today’s statement on the Government’s Plan for Growth addressing the rise in cost of living and energy crisis is cautiously welcomed by ACCA UK as a step in the right direction to encourage business investment and growth.
“While this package will help in the short term we need to see more action by the government to alleviate the increasing financial pressures on businesses in the medium and longer term. For our economy to return to growth, small businesses, in particular, will need more support to invest, innovate, develop their workforce, and expand international trade, than was promised today.
“We have frequently highlighted our concern about the complexity of the tax system, so welcome the government’s commitment to simplification – reaffirmed today – and look forward to seeing more detail. However the government should be mindful that the changes announced today do not add yet more complexity.”
Tax Simplification and IR35
“We welcome the aim to simplify tax from today’s announcement. IR35 has desperately needed to be reviewed. The tax system as it stands is overly complex and burdensome for businesses, individuals and public bodies. The reform in April 2021 to IR35 left many businesses without the support they desperately needed due to confusion surrounding the rules and regulations.
“Now more than ever, simplicity is key. A simpler tax system avoids the potential for mistakes and enquiries, which too often distracts HMRC from addressing serious and deliberate evasion.
“However the dissolution of the Office of Tax Simplification is worrying and will impact UK businesses. The OTS previously worked with holding agencies and provided guidance on previous tax reforms and regulations. Without the OTS and with further details needed on how the government will simplify tax many UK SMEs will still be facing a complicated and unclear tax system.”
Corporation Tax/rate cut
“The government’s decision to keep Corporation tax at 19% will encourage businesses to invest. With the main rate of Corporation tax previously set to increase to 25% next April many businesses were becoming more nervous already feeling the strain of a rise in inflation, cost of living and energy prices, putting unnecessary pressure on businesses. Now more than ever businesses are looking at the ease of doing business and where investment opportunities lie.”
“ACCA is pleased to see the announcement of a reversal of the increased national insurance rate, something which we cautioned the previous chancellor against introducing earlier in the year. While we greatly appreciate the need to balance taxes raised against increased spending for the National Health Service, we are concerned that the increasing costs of doing business are negatively impacting business viability, particularly for SMEs. This reversal of the increase has created some breathing space for businesses in this period of economic turmoil.”
“Today’s announcement made no mention of a reduced VAT rate for businesses which needs to be considered by the government. VAT cuts would have provided businesses, and in particular the hospitality sector, a fighting chance at moving towards post-pandemic recovery. As we saw during the pandemic, targeting lower rates of VAT at businesses helped to give them a boost after the various lockdowns. Now with rising inflation, consumers are cutting back on discretionary spending. In order to keep the economy moving, we need action to support consumers and businesses.”
“Given the importance of cashflow management and the detrimental impact of late payment on the financial viability of SMEs, ACCA believes this is a missed opportunity to extend the remit of the Small Business Commissioner.”