§ Mr. David ShawTo ask the Chancellor of the Exchequer if he will make a statement on the achievements of(a) his policies and (b) his Department in helping small businesses over the last 12 months as against the previous 12 months; and if he will publish the performance indicators by which his Department monitors those achievements and the statistical results of such monitoring.
§ Mr. Maples[holding answer on 22 July 1991]: The Government's economic policies are designed to maintain an environment in which business and enterprise can develop and prosper. The Treasury therefore places a high priority on helping small businesses, and among the specific measures included in the 1991 Budget were:
- allowing 700,000 small employers with average monthly PAYE and national insurance contributions bills below £400 to pay quarterly rather than monthly; increasing by over a third the VAT registration threshold to an annual turnover of £35,000—as a result up to 150,000 businesses need not be registered for VAT;
- raising the turnover threshold for VAT annual accounting from £250,000 to £300,000. Qualifying businesses only have to make one return a year instead of four, with payments being made monthly;
- halving to one year the period firms must wait before claiming relief from VAT on debts written off in their accounts;
- increasing by a quarter to £250,000 the profits limit below which companies pay corporation tax at the small companies rate of 25 per cent. The limit for marginal relief was also raised by a quarter to £1,250,000;
- allowing unincorporated firms to set trading losses against capital gains tax, as companies can do already; increasing the limit for capital gains tax relief on businesses sold by individuals on retirement, and reducing the qualifying age from 60 to 55 years;
- reviewing the VAT serious misdeclaration penalty so as to produce proposals for next year. In the meantime, the penalty rate was reduced from 30 to 20 per cent.
Inland Revenue and customs and excise officials also continuously review forms, explanatory notices and leaflets with the aim of providing guidance which is easily understood.
Despite the recession, the success of Government's policies is demonstrated by the latest statistics on VAT registrations which show that, although down in 1989, there was a net average increase of around 800 new businesses per week during 1990.