MPs call for legal entity for SMEs

News Article - Thursday, March 20, 2008

filed under: Regulatory

Further information

Three MPs have tabled an early day motion (EDM) in parliament calling for a new regime that will provide small businesses with a legal entity to lobby for their rights.

According to Labour MP David Drew, Tory Peter Bottomley and Bob Spink, small and medium-sized enterprises (SMEs) in Britain need a " suitable legal entity designed for use in the 21st century".

The EDC, entitled Income shifting and the future of small business taxation, calls for a review by HM Treasury of the ways in which smaller firms could be provided with a legal entity.

Chancellor Alistair Darling announced that small business taxation would be examined further and ways of simplifying current rules would be examined.

He also outlined proposals to reduce the amount of red tape that government departments can impose on small businesses in order to reduce the burden of regulation on SMEs.

Some leading accountants have suggested that efforts are being made to simplify the tax system for small firms and predict that a new legal entity could confuse matters rather than improve them, Accounting Web reports.

However, others have welcomed an attempt to provide small businesses with the right accounting and taxation systems for contemporary Britain. The current system of limited companies has been in place since the 19th century.

The EDC also advises that legislation on income shifting within small limited companies should be deferred.

SME accounting software can help smaller firms to meet their management reporting and taxation requirements.

Add to del.icio.us | Digg this story