A business lobby group has backed a petition aimed at persuading Gordon Brown to change his stance on income shifting.
The Forum of Private Business (FPB) said the practice is carried out ‘as standard’ by many small businesses to reduce tax bills by dividing income between family members who are also employees.
However, despite income shifting being deemed as lawful in a case taken to the House of Lords last year, April will see the introduction of new laws to block advantages gained from the practice.
A petition has been drawn up by the Professional Contractors Group (PGC), calling on the Prime Minister to back down on the plans.
Sir Robert Smith, the MP for Aberdeenshire West and Kincardine, has also proposed an Early Day Motion urging the Prime Minister to reconsider, pointing out that the practice was, for many years, recommended by the government.
Matt Goodman, the FPB’s policy representative, applauded the move.
“Mr. Brown has ignored the UK’s highest court, which sent a clear message that income shifting is an established, accepted arrangement,” he said.
“Yet again, the government – which in the past had approved the practice – is insisting this is a loophole and piling yet another tax burden on smaller businesses.”
© Crimson Business Ltd. 2008
