RMIF warns on proposed tax change

Small family-owned businesses that reduce their tax liability through ‘income shifting’ could be hit by a massive increase in red tape as the result of Government plans to crack down on the practice, warns the Retail Motor Industry Federation (RMIF).

Income shifting occurs where those that jointly own a company cut down on their tax bill by dividing the profits between them. The Government wants to stop this, and draft legislation that could outlaw income shifting was published last month.

RMIF Chairman Alec Murray: ‘Many small businesses in the retail motor sector practice income shifting, and under the proposed new rules, these businesses would need to account for the work each member of the business contributed.

‘Apart from a further intrusion by Government, UK business is already being stifled by bureaucracy, and this additional level would mean more forms to fill in, and more red tape to deal with.

Murray adds: ‘The RMIF will follow the progress of the legislation, and advise our members as necessary.’