This page contains a Flash digital edition of a book.
Taxing times for the entrepreneurs


However, their future potential is being crippled by high taxes and regulation.


Jabbar Khan, Director of Birmingham’s Lasan Group, sets out some of the issues that he believes need to be tackled to allow small businesses to thrive and particularly urges a reform of the taxation process


Successful entrepreneurs are the life- blood of a successful economy. Their commitment and risk-taking is even more important today, but this spirit is being stifled by ever increasing tax burdens imposed on businesses.


The UK’s major debt problem makes the future growth of the wealth creat- ing private sector vitally important to every person in this country. It is clear from past experience that small busi- nesses can be the major driver of job creation and reduced unemployment.


The entrepreneur often has to take major risks in starting a new business, including having to underpin initial and ongoing investment by putting his house and his family’s welfare at risk. He (or she) then faces a barrage of taxes including stamp duty, business rates, PAYE and NIC for staff, corpo- ration tax, income tax and, of course, VAT at the higher rate shortly - not to mention the administrative cost of col- lecting this tax on behalf of the govern- ment. An accountant is also needed, largely for compliance work to satisfy the taxman, and this might also be considered as an indirect tax.


These tax burdens contribute to a high risk of failure for many start-up businesses. If the worst happens, the entrepreneurs suffer most. They have risked everything, yet they are the last on the list to be paid if the business fails, possibly resulting in the loss of their houses and suffering for their families. This is hardly an encourage- ment to take the risk of starting a new business.


The entrepreneur’s plea is simple: after payment of corporation tax, please let me have my money as a fair reward for the risks that I have taken. Taking, as an example, a business with


a turnover of £1million, the overall total of a chain of 7 or 8 different taxes will earn the taxman in excess of £300,000, including VAT, rates, income tax, PAYE/ NIC, corporation tax and so on.


After this, surely the business owner should be allowed to keep any profit without the imposition of a further 40% tax on earnings above £44,000 for the business owner, who deserves tax relief on any remaining profit resulting from his risk taking. These earnings should not be confused, or combined, with the owner’s wages drawn from the business, which are already sub- ject to income tax.


The present system is grossly unfair to the risk taker. Where is the incen- tive for the entrepreneur? Where is the reward for risk taking that is essen- tial to the future growth of the wealth creating private sector? The crushing tax burden on the private sector limits further investment and risk taking essential to future profitable growth for individual businesses.


The present tax climate in the UK does not incentivise risk taking and business success. It can only stifle risk taking and force many ambitious entrepre- neurs to shut down their businesses and obtain alternative employment, or to leave the UK. This can only limit the success of small businesses as the key drivers of increased employment in the wealth creating private sector.


A bold approach from the government on reducing the overall tax burden on small businesses is essential to stimulate similarly bold action from tomorrow’s entrepreneurs. An over- all tax reduction will encourage busi- nesses to thrive and increase the total tax take, an essential factor if the UK economy is to move towards long term recovery.


Spice Business Magazine


24


December 2010


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64