Small businesses are being urged to sign a web-based petition to protest against the introduction of new income shifting laws.
Income shifting, the practice of dividing income between family members who are also employees, is considered ‘as standard’ by many small businesses to reduce tax bills.
However, April will see the introduction of new laws aimed at blocking advantages gained from the practice.
The Professional Contractors Group (PCG) said the new rules will mean more red tape for jointly-owned businesses, with family businesses in particular losing out.
“If profits are not shared out in what the tax man sees as a ‘commercial’ way, there could be a heavy tax penalty to pay,” said a spokesman.
John Brazier, the group’s managing director, fears the proposals could create ‘a sort of nightmarish reverse national lottery’.
“Everyone will be forced to buy a ticket, and if your unlucky number comes up you could face a mauling from HMRC and a hefty tax bill at the end of it.
“Even if you are not clobbered by a tax investigation, you will still have to jump through all the hoops and keep all the records – most of them totally unnecessary for running a family business.”
To sign the petition, visit petitions.pm.gov.uk/IncomeShifting1
© Crimson Business Ltd. 2008
