Just nine days to go the Budget and it still isn't clear whether George Osborne has persuaded the banks to buy into the credit easing scheme he once thought promised so much. Well, here's a suggestion for the Chancellor: rather than worrying about an initiative whose benefits now look, at best, marginal, why not use this Budget to offer small businesses something they all want: tax reform.
The Office of Tax Simplification (OTS), an independent body set up by the Government last year under the leadership of the former PricewaterhouseCoopers partner John Whiting, has published a blueprint for exactly that. And while there are many small businesses who complain about lack of access to credit, the number that waste valuable time on excessively onerous tax administration is far higher.
The OTS's most eye-catching proposal is that 2 million businesses with annual turnovers of less than £30,000 ought to be exempted from the requirement that they file full accounts with the sort of detail expected from much larger companies. Instead they should be able to operate with cash accounts – much like personal taxpayers – that only require them to keep records of receipts and expenses.
It's a sensible recommendation that would not cost a single penny in lost tax. So much so that there is a case for a significantly higher threshold – the £73,000 VAT registration limit might be a convenient level at which to peg the requirement.
What it would need, however, is a change in culture at HM Revenue & Customs, which often seems to work on the basis that all small business owners are trying to pull a fast one. The OTS recognises as much – calling for HMRC to be less aggressive with smaller companies – though it's a pity the office itself hasn't been more supportive too. It's backed away from pushing for the abolition of the notorious IR35 regime, for example, which causes contractors so many problems.
More happily, the OTS is now suggesting a reform that would help many thousands of small companies disincorporate, closing the book on one of those sorry stories all too common thanks to Britain's constant meddling with tax regulation. Tens of thousands of businesses incorporated under the previous government, when tax breaks made it advantageous to do so. The tax breaks were eventually abolished and it would make sense for many businesses to disincorporate, in order to escape the more onerous reporting requirements they are currently subject to. But doing so would force many businesses to crystallise substantial capital gains – and a nasty tax bill. The OTS suggests changing the rules to prevent that.
Will the Chancellor respond to the OTS's charter for tax simplification? Well, logic suggests Mr Osborne should do so – most of what is suggested implies no loss of tax revenue for the Treasury and is a neat fit for a government that has promised to cut red tape. On the other hand, none of these measures will make the sort of headlines that credit easing promises to deliver. They will require the Chancellor to follow head rather than heart.
Sylvan set for £60m IPO
Sylvan Energy is due to unveil details of its plans to list on Aim today. With a projected market cap of $100m (£60m), the company will be the biggest IPO of the year so far. Sylvan is a Pennsylvania-based onshore oil and gas exploration and production company, with assets in the east and south of the US, several of which have surprised analysts with better-than-expected early development results.
Chinese rare earths miner comes to Aim
Commodities is still one of the few growth industries for the Aim market (as is it is for the main market in London), and two companies in the sector are due to be announced today.
Rare Earths Global will announce its intention to list this morning. The Chinese company wants $50m from investors looking for exposure to this increasingly valuable niche of the mining market. It describes itself as a "fully integrated rare earths" solution, meaning that it extracts, separates, refines and trades the minerals used in technology such as mobile phones. The company has export licences from the Chinese government, which has increasingly restricted trade in rare earths, but also sells to the rising number of global manufacturers setting up shop in the country – Apple, for example.
Bushveld Minerals will also say today that it is ready for an Aim listing and is seeking £5m for its mineral exploration projects in South Africa. The company has assets in the Bushveld region, which hold a fair chunk of the worlds iron ore and titanium reserves.
Green economy can be next great growth story for West: Jonathan Short, managing director, ECO Plastics
In the space of six years, we've built the largest plastic bottle recycling plant in the UK – we employed 30 people in 2006 and today we employ 160.
We're a manufacturing business, but we operate within the green economy, which can be the next great growth story for Western economies, as long as we are careful not to export the expertise we have developed.
There is more that local and national government can do to encourage our business: what we've started to see over the past couple of years is a deterioration in the quality of the plastics we receive – there's much more detritus coming in with it.
That's not the fault of the consumer – consumers really have embraced recycling – but the problem is that people have been getting mixed messages from local authorities about how and what to recycle. We could double the number of plastic bottles collected in the UK with more effective messaging to consumers.Reuse content