Taxes on Small Businesses

Carol Monaghan Excerpts

Wednesday 18th October 2017 Westminster Hall

[Carol Monaghan (Glasgow North West) (SNP)]

It is a pleasure to be called so early in the debate this afternoon, Ms Dorries. I thank the hon. Member for St Ives (Derek Thomas) for securing such an important debate. He spoke passionately about constituency interests and local businesses that are affected.

The hon. Member for Newark (Robert Jenrick) presented his personal experience of tax on SMEs and talked about the importance of supporting innovation and enterprise, which I will talk about a little. The hon. Member for Witney (Robert Courts) talked about what he saw as the opportunities presented by Brexit. I do not necessarily share his optimism for the next couple of years, but we will see what happens. Time will tell on that one. As far as I am concerned, it is important to reinforce that Brexit is a real threat to small business, and we should do everything we can to avoid a hard Brexit. I know from speaking to trade organisations across the UK that their members are genuinely worried about what Brexit—or, even worse, a no-deal Brexit—will mean for their small businesses.

The Scottish Government recognise the importance of SMEs and are taking action to support them with initiatives such as the £500-million Scottish growth scheme to target high-growth, innovative and export-focused SMEs, which will clearly need as much support as they can get after March 2019. In June the Scottish Government announced the first tranche of the Scottish growth scheme, aiming to stimulate more than £200 million of investment to help small businesses grow, and they will make a further investment this year. Alongside additional private sector investment, we expect that to provide more than £100 million to innovative, high-growth companies. Scottish Government funding for new business research and development projects is also increasing, with an additional £45 million being invested over the next three years.

Various Members have mentioned VAT on tourism. The hon. Members for St Ives, for Montgomeryshire (Glyn Davies) and for Strangford (Jim Shannon), who has left the Chamber, mentioned the tourist tax. I have just come from the Royal National Mòd, which is being held this year in Lochaber around the Fort William area. The area is the outdoor capital of the UK, and definitely of Scotland. The area is poised and ready for expansion. The opportunities for tourism are unique. Ben Nevis is on its doorstep and there are all sorts of activities available from white-water rafting to low and high-level walking. One issue that crops up time and again is VAT on tourism. If that could be brought into line with other EU countries, we could see much greater investment and real expansion in the area.

Business rates were mentioned by most Members. The Scottish Government’s small business scheme has removed the rates burden entirely from 100,000 premises across Scotland and we will urgently take forward the Barclay review recommendations on non-domestic rates. More than half of our rateable properties are paying nothing this year, and more than 70% of Scottish properties are paying the same or less in 2017-18 than they did last year. That is making a difference to small businesses across Scotland. Additionally, all rate payers in Scotland have the right of appeal against the independent assessor’s determination of rateable value, which is free to do in Scotland, unlike in the rest of the UK.

We believe a simplified tax code would pave the way for a significant boost in tax yield. The UK has one of the most complex tax codes, which is often guilty of creating an uneven playing field for our businesses and workers, as well as creating loopholes that disproportionately aid and assist the wealthy and powerful. The hon. Member for Witney talked about the amount of time that had to be spent on completing tax returns, which is a big issue for small businesses.

We broadly support the transition to digital taxation, but we have a series of concerns regarding its implementation, particularly for small businesses and specifically around the impact of digital taxation on low technologically advanced businesses, businesses in rural areas with restricted access to the internet, and small businesses generally that perhaps do not have the skills required to deal with it.

As we face Brexit and the challenges that that will pose for our small business community, the UK Government must do more to support small businesses, which are the backbone of our economy, and I urge the Minister to look seriously at the issue of VAT on tourism that has been raised by several Members this afternoon.