Campaigns Manager Victoria Carson said there are a number of areas that the Chancellor must address: "The Government must deliver on promises to cut regulatory and administrative burdens, reduce tax burdens, open up government contracts to smaller businesses and work harder to understand the needs of smaller companies in areas such as education." said Miss Carson. 

"They must also make sure that small firms aren't suffering from unfair competition such as that created by Low Value Consignment Relief." she added. 

The FPB wish list has been published a week ahead of the Chancellor's Budget speech and calls upon him to: 

• Amend the Low Value Consignment Relief (LVCR) offshore VAT loophole
• Re-introduce the nil rate starting band on Corporation Tax for the first £10,000 of profits
• Introduce a more efficient VAT registration process
• Integrate National Insurance with income tax for schedule E taxpayers
• Link the National Minimum Wage to the Retail Price Index
• Combine VAT and Company Tax inspections to follow those recommendations already presented in the O'Donnell Review.
• Reintroduce tax exemption on computers for employees
• Give businesses more influence within skills initiatives
• Focus further education on the needs of businesses
• Priorities must be set for the Small Business Service
• Set aside a percentage of public procurement contracts for smaller businesses
• Control of the simplification agenda
   

The details of each item on the FPB's Budget Wish List are below: 

Low Value Consignment Relief

The FPB has been campaigning to close a VAT loophole created by Low Value Consignment Relief (LVCR) which is putting high street retailers of goods such as DVDs and CDs out of business. Goods worth less than £18 are being shipped to and from the Channel Islands and then sold without the imposition of VAT, by using the LVCR mechanism. High street retailers are unable to compete with these artificially low prices.  

Nil starting band on Corporation Tax for the first £10,000 of profits

On the introduction of the nil rate starting band, thousands of sole traders and partnerships set up limited companies to take advantage of these changes. As a result of its abolition, thousands of micro businesses now face an extra bill of up to £1,900 a year. This is in addition to the extra bureaucracy necessary after registering with Companies House. These businesses are unable to revert to their prior business status without being subject to Capital Gains Tax. The FPB would like the Chancellor to return to the nil rate starting band on Corporation tax for the first £10,000 of profits. 

Introduce a more efficient VAT registration process

The FPB is pushing for the Chancellor to simplify procedures and lessen administrative burdens, especially in the VAT registration process.  

Integrate National Insurance with income tax for schedule E taxpayers

There should be full integration of Class 1 National Insurance (NI) with income tax for schedule E taxpayers, with an appropriate proportion of the tax being designated as NI and income tax. This would significantly reduce administrative complexity whilst maintaining the integrity of the NI fund. 

Link the National Minimum Wage to the Retail Price Index

The increases in the National Minimum Wage (NMW) have been damaging to smaller firms, are well above average earnings growth and, furthermore, the FPB believes the periods between increases are too short to allow for proper analysis of the impact of the previous increase. The level and rate of change in the NMW is hampering competitiveness and job creation amongst smaller firms. The Low Pay Commission recently signalled a slowing of the rate of increase in the NMW but the FPB firmly believes the NMW should be linked to the Retail Price Index. 

Combine VAT and Company Tax inspections to follow those recommendations already presented in the O'Donnell Review

In July 2003 the Chancellor of the Exchequer announced a major review of the organisations dealing with tax policy and administration. The review's remit was to examine the best organisational arrangements for achieving the Government's tax objective. Recommendations included the creation of a new department, integrating Customs and Excise and the Inland Revenue, new policy-making arrangements between the new department and HM Treasury and a new accountability framework. The FPB wants VAT and Company Tax inspections to follow those recommendations to further simplify the process for smaller businesses. 

Reintroduce tax exemption on computers for employees

The FPB criticised the Chancellor's decision in the 2006 Budget to cancel the tax exemption on computers loaned to employees for private use. Abolishing this scheme contradicts the Government's agenda to promote IT skills and does little to promote the skills of the workforce. 

Give businesses more influence within skills initiatives

The Skills Sector Council (SSC) should be doing more to incorporate the needs and ideas of smaller businesses. SSCs must respond to the market demand. They are supposed to be employer-led, delivering skills initiatives that businesses need. However, so far, they have not succeeded in doing this. To date, the ‘Train to Gain' initiative appears to be providing a useful service to smaller firms, but there is still a disproportionate bias towards large firms by SSCs, due to funding constraints. 

Accreditation of skills acquired through informal learning would not only meet the Department for Education and Skills' (DfES) target for raising adult qualifications but would also offer employees a simple route to greater self-esteem and confidence. Businesses must not be charged a levy in order for skills training to be accredited by the Government. 

Focus further education on the needs of businesses

The FPB welcomed the announcement of the Further Education Bill in the Queen's speech. We are interested in seeing whether the Bill will put employers' needs at the centre of the further education sector. Smaller businesses must be given a voice in devising skills initiatives and we would like to see businesses included in other levels of the education sector. The FPB believes that a tax credit should be introduced to enable those employees who are not professionally qualified to continue with professional development. 

Priorities must be set for the Small Business Service

Clear priorities must be established for the new Small Business Service policy unit within the Department of Trade and Industry (DTI). The reformed SBS must have the ability to influence policy that impacts on smaller businesses. 

Set aside a percentage of public procurement contracts for smaller businesses

Smaller businesses are excluded from the public procurement market by government departments' excessive bureaucracy, the tendency to favour established suppliers with large reputations, and irrational adversity to risk. To combat the problem, the FPB would like to see a percentage of government contracts set aside for smaller businesses. This would not give smaller businesses an unfair advantage; rather, it would force government departments to make their bidding process more open and accessible to smaller businesses, and therefore open up greater competition for public contracts. This would save taxpayers' money, correct the existing market failure and give smaller businesses their fair share of contracts. 

Control of the simplification agenda

We would like to see the introduction of an independent control mechanism to monitor and evaluate the targets of the Government's simplification agenda. This is vital because a fair and unbiased review will allow businesses to benchmark the progress of the Government in its commitment to reducing the regulatory burden.  

Notes to editors

The Forum of Private Business(FPB),will be available to give comment ahead of, and in reaction to, the Chancellor's Budget Speech on 12 March 2007. Note: The FPB will have spokespersons available for interviews in studio, by ISDN line or over the telephone. FPB members may also be available for case studies. 

A more detailed FPB Budget wish list is available on request from Media and PR Officer, Matt Hardman (contact details below). Alternatively it can be viewed at www.fpb.org.