Small firms sell up to avoid higher tax
SCORES of small business owners across the Tees Valley are selling up to avoid paying higher rates of capital gains tax, according to a Darlington taxation expert.
Peter Hogan, partner at Clive Owen & Co chartered accountants and business advisers, which has an office on Conniscliffe Road, Darlington, said many clients had brought forward their sales plans so they could beat the April deadline for the abolition of taper relief.
Under the current regime, businesses can reduce their tax liability to around 10%. If the government resists calls to reverse its decision to abolish relief, that will rise to 18%. Business leaders have united in furious opposition to the change.
Mr Owen called on the government to hurry up and make a final decision. “When Alistair Darling made his pre-budget announcement in October there was a lot of opposition, so the government said it would make another announcement about the proposed changes before Christmas. They then changed this to after Christmas and here we are, still waiting.
“Owners cannot sell a sizeable business in five minutes. If they don’t crack on and do something and the government goes ahead with scrapping taper relief, that will mean people paying a lot more tax.”
Speaking on behalf of the North East Chamber of Commerce (NECC), Mike Parker said: “At a time when we are trying to create an enterprise culture, scrapping taper relief is a real area of concern, especially for small to medium-sized enterprises.
“Small businesses are looking to sell lock stock and barrel at a time when we are trying to encourage those businesses to set up.”
According to the NECC, Chancellor Alistair Darling risks creating a de-stablising rush of small business sell-offs unless he opts to reverse his planned reform of the tax.
Mr Darling announced late last year plans to abolish the taper relief on Capital Gains in a bid to simplify a system blamed for allowing private equity firms to pay less in tax than their secretaries.
Opponents say the move would see a number of premature sales and dissuade others from pursuing new ventures.
