Brown and Darling take note: tax doesn’t have to be taxing

In his 10 years as Chancellor, Gordon Brown never tired of telling us how much he was in favour of enterprise.

Further down the corporate chain, the government is attacking husband and wife firms. After being defeated by the Law Lords in an effort to tax dividends paid out to spouses as if they were income, the government is now attempting to introduce a cumbersome set of rules that will force couples to assess exactly what contribution each partner makes to the business. So an electrician, for example, who gets his wife to answer the phone and arrange bookings will have to come up with some way of proving her contribution, or else face a higher tax bill.

What has been forgotten is that tax rules need to be simple. Entrepreneurs already face a tough challenge. They need to find an idea for a business, discover how to finance it, secure premises, staff and most importantly customers. They don’t need to be spending time deciding whether something is a business asset or not, whether they have hit their lifetime limit on capital gains, how much their wife is contributing or whether the machinery they might be buying is investing in the future, whatever that might turn out to be.

Any time they spend doing any of that is time they aren’t spending building their business. In the short term, the costs of that will be marginal. Over the medium term, it will mean fewer small businesses – something from which we will all suffer. At this rate, the next time National Enterprise Week rolls around, no one will be able to attend any of its events. They will all be too busy filling in forms for the taxman.