Pre-Budget statement: Cut in red tape for small businesses

bureaucracy

PLANS TO merge the Inland Revenue and the Contributions Agency have been brought forward to next April as part of the Government's drive to cut red tape for small businesses, the Chancellor announced yesterday.

The Inland Revenue employs 51,500 in hundreds of local offices, while most of the Contributions Agency's 8,000 staff are at Longbenton in Newcastle upon Tyne. Much of their work in collecting PAYE and National Insurance overlaps, and the Government intends that the merger should reduce confusion on the part of businesses and free Revenue staff to pursue tax-avoiders. Asked whether the merger would lead to any office closures or job cuts, the Inland Revenue said yesterday: "We don't know yet."

Gordon Brown announced that his plan to slash red tape for new businesses - the "New Employer Support Initiative" which he launched in his March Budget last year - has so far proved a success. From April 1999, hundreds of thousands of start-up businesses will be able to call on"One Stop Shops" to get advice and practical help.

A pilot scheme in Leicester, one of those set up around the country over the past three years, has been providing business start-ups with one-to- one advice on setting up a payroll system, as well as working out tax and National Insurance payable by employees.

The planned shops will usually be in a local Revenue office and manned by advisers from the Inland Revenue, the Contributions Agency and Customs & Excise.

How far this practical help will go has yet to be decided. The definition of what a start-up business is will also have to wait until the Chancellor's next Budget in March.

A spokeswoman for the Revenue said: "We haven't turned anybody away. If anyone approaches us for help on tax, we provide it."

Another strand of the initiative which has yet to be settled is a proposed national telephone helpline. Small businesses can already phone a national self-assessment helpline, introduced in April 1996, with questions on tax. This helpline will continue.

The merger of the Revenue and the agency is seen by the accountancy profession as a long-overdue reform .

Ian Stewart, a corporate partner with KPMG in Manchester, said: "This will enable the Inland Revenue, which is usually short of staff, to free up people for investigations."

Much of the advice on payrolls that the shops will offer would previously have been done by accountants. However, Mr Stewart denied that accountants would lose work, saying: "You're not going to have accountants on the breadline because of it."