I am intrigued by the contrast between Chancellor Gordon Browns Pre Budget and the Irish Budget announced by Irelands Finance Minister, Brian Cowen. On the one hand we have an incredibly pro business budget which is bound to encourage entrepreneurs, small business and equity investment in the Irish economy. 

By comparison in the UK small business and entrepreneurs are continuing to be snuffed out. Managed service companies (MCS's) for instance, are deemed to only "disguise employment" and are subject to increased measures in the Pre-Budget announcement. This includes enabling the recovery of "outstanding" tax and NI contributions from the companies who engaged the MCS. An MCS could be a professional who has decided to set up a consultancy practice. This is a "tax motivated incorporation" rather than entrepreneurship and small business development vital for UK economic growth, i.e. the person isn't really a consultant she's a deemed employee.

It is actually becoming prohibitive to start a business in the UK to the point  where, economically, you are actually better off staying in full time employment. Why would you want to take on the financial risk within a burdensome, complicated tax framework where your government assume the worst about you, and in any case you can be waiting up to six months for VAT registration without any guidance about accounting for VAT in that period.

What's the alternative, well moving your business out of the UK and incorporating it in Ireland where small business and entrepreneurs can be assured of support is looking a lot more attractive.

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To emphasise Marks point in his post here are some of the main business friendly measures "aimed at reducing the administrative burden on this sector".

1. Small companies whose Corporation Tax liability is currently less than €50000 can pay preliminary tax, based on their previous years final tax liability. Additionally he increased this threshold from €50000 to €150000 making it simplier and more straightfoward for small business and eliminating the need to forecast profits, and pay your friendly accountant. Boo for the accountant, hooray for the business. The effect of this will assist the cashflow of the businesses and allow the businesses to concentrate on building more business.
2. He also plans to introduce measures proposed by Revenue(taxman) to allow new start up companies not have to pay any preliminary tax in respect of their first accounting period. Again a boost of cashflow in the arm of business.
3. The Revenue have been asked to explore ways and opportunites to reduce the tax compliance burden on all firms, large or small. In your face HMRC.
4. The annual VAT cash accounting threshold for small firms is being raised from €635000 to €1m from March 07.Simply this allows companies to account for VAT on a cash basis, thereby allowing them only to return VAT payable when the invoice is paid by supplier. More cashflow in the arm of business.
5. If you provide a service you will not have to register for VAT if your turnover is less than €55000 for services or €70000 for goods.
6. Smaller firms will not now have to make the 6 bi-monthly vat returns but only 3 and in some cases 2.

 Brian Cowen did announce other schemes to enable firms to raise Capital via BES schemes and additional funding was announced to help fims to expand by Government giving grants to assist. The detail of this is unknown until the Finance Bill is issued in early 2007.

 

In general I agree with the above and indeed the Budget was generous for the most part. The only thing that really annoyed me was the increase of .5% in the health levy on earnings over €100,000 pa. Apparently if you have an income of €100,000 or more you are "wealthy" according to Brian Cowen. €100,000 is'nt what it used to be Mr Cowen, and anyway why do we need to pay a health levy if you possess Private Health Insurance?