Small firms 'uncertain' about income shifting proposals

Small businesses in the north-east are unsure about how Alistair Darling's plans to clamp down on income shifting will affect them, it has been claimed.

With the chancellor expected to introduce new taxation for family-run businesses in his Budget next month, north-east newspaper the Evening Gazette reports that many of the region's smaller enterprises are viewing the proposals with trepidation.

Guy Woodall, director of local family-run company Thorncroft Drinks, described Mr Darling's plans for income shifting as "very difficult to enforce and to make sense of".

"I can't see how an official could come into my business and apportion responsibility for bringing in different amounts of income," he added.

Explaining how the changes will impact on small businesses in the UK, local tax accountant Elizabeth Wilson said: "From April 6th, husbands and wives in particular could be asked to justify the underlying commercial reasons for the way in which income is allocated to family members and a greater tax liability may be generated."

However, small firms may take hope from a recent article in the Mail on Sunday which claimed that Mr Darling will relax his plans for income shifting in the face of criticism from the business community.