FSB says SMEs should not face additional costs

Calls for Revenue Scotland to handle council tax and business rates

Andy WilloxSmall firms want Revenue Scotland to handle both council tax and business rates to help ensure the cost of further fiscal devolution is borne by tax authorities and not taxpayers.

The Federation of Small Businesses says it is vital that the additional tax powers coming to Scotland place no additional reporting burden on small enterprises.

The business group is also arguing that there is no reason for the Scottish Government not to undertake a root-and-branch review of business rates in parallel to the one planned for England.

On Monday, Chief Secretary to the Treasury, Danny Alexander, revealed further details about the scope of the non-domestic rates review in England, confirming the review is set to report in time for the 2016 Budget.

The FSB’s Scottish policy convener, Andy Willox said: “We all want to see a modern, efficient tax system.  For some time we have argued that the Scottish business system needs radically modernised to make it fit for the way we do business in the 21st Century.

“We’ve also made the case to the UK Government that there should be no additional administrative burden on business as a consequence of further tax devolution. Simply put, firms shouldn’t have to submit the same information to multiple bodies and shouldn’t be asked for any additional information as a consequence of constitutional changes.

“During this period of change, we must keep an eye on the paperwork as well as the pounds.  We must see tax bodies share information and co-ordinate communications.  As a starting point, we should see the collection of business rates move from councils to Revenue Scotland, who can then work with HMRC to reduce duplication and share information.

“This would still allow local authorities to decide how they spend their allocation, while streamlining collection and in the process, reducing costs and improving services.”

In February the FSB wrote to the Scottish Government’s Local Government Minister Marco Biagi, co-chair of the Commission on Local Tax Reform, urging him to clarify whether the review would be narrowly focussed on council tax.  In tax year 2012-2013, council tax raised £1.9 billion, while business rates raised £2.3 billion.

Mr Willox added: “While we understand that the council tax is a difficult political issue, we believe we should be spending at least as much political energy looking at the non-domestic rates system. While the Small Business Bonus scheme continues to give our members an advantage, the planned changes in England mean that Scotland has to change gear or risk being left behind.”

Last week, the small business lobby group also submitted evidence to Ministers about the operation of the Scottish business rates system. It warned the system is dominated by “inaccessible complexity” and made case for the system to become, at the very-least, more transparent and user-friendly. The simplification of the UK tax-regime is also a key plank of the FSB’s 2015 General Election manifesto.

The Scottish Retail Consortium has also demanded a review of business rates, stating that the current system is no longer fit for purpose.

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