Below is a blog written my colleague and Mercer & Hole partner Cathy Corns on SME Plus blog, in relation to the government's retreat on key tax reforms.

According to The Times the Government are looking to mitigate the changes proposed in the Pre Budget Statement three weeks ago. Apparently the plan is to introduce a form of retirement relief of £100,000, aimed to assist small businessmen who are selling up and retiring. As of the time this was posted the HMRC website had no details on this and so we do not know if it is accurate and, if so what is meant by small or retiring or what tests have to be met to qualify.

Any mitigation of the tax is welcome and I will be in touch again when more details are available.

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An announcement has been widely expected and commented on in this and other blogs (see SME blog) following on from the Revenue’s defeat in the House of Lords. This is a case of the dog that didn’t bark or at least not yet….

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A timely reminder that modifications are required to the format of some invoices from 1 October 2007.

The businesses most affected are those

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The Sunday Times reported yesterday that Alastair Darling was proposing a “purchase tax” on high polluting cars (4x4s etc). Details were obtained from a leaked Treasury document which also revealed that the top rate of road fund tax is also due for a large increase.

The surcharge has apparently been set at £2,000 while at the other end of the scale buyers of very green cars will be able to claim a rebate of £2,000 off the purchase price.

The proposals are strikingly similar to those put forward by the Conservatives as reported in Motor Trader last week.

No doubt all will become clear in next months Pre Budget Report.

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You may recall that earlier this week Cathy Corns, Corporate Tax Partner at Mercer & Hole wrote an article on the Jones v Garnett case for her SME Blog.  Following on from this piece Cathy has submitted an additional blog on the topical "Arctic Systems Ltd" case.

The House of Lords issued their judgement in the case of Jones v Garnett (also known as the “Arctic Systems Ltd” case) on 25 July 2007. To much rejoicing the case was decided in favour of Mr and Mrs Jones. However, the Revenue is a bad loser.

On 26 July a written Ministerial statement was issued by the Exchequer Secretary to the Treasury, announcing the intention to change the law.

Using the standard “the Government is committed to maintaining fairness in the tax system” statement the Government now believes it needs to do something to “ensure that there is greater clarity in the law regarding its position on the tax treatment of income splitting”. Actually, in my opinion, the law is now clear – it may not say what the Revenue wants it to, but that is unfortunate (for them) rather than unclear.

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Cathy Corns, Corporate Tax Partner at Mercer & Hole wrote this article for her SME Blog earlier today.

This all seems to have been going on for so long you may need reminding of what all the fuss is about; so 

 - Mr and Mrs Jones ran a small IT company of which Mr Jones was the sole director. They each owned one share in the company took a small salary and extracted the majority of their required funds by way of dividend. These, of course, were paid in line with the shareholdings, on a 50:50 basis.

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H M Revenue & Customs have announced new advisory fuel rates which can be used by businesses to reclaim VAT on employees mileage allowances for business travel.

The new rates which apply to all journeys on or after 1 August 2007 are as follows:-

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Our new edition of Tax Plus is now online for your reading pleasure.

Current articles include:-

• The tale of Mrs. Phizackerley
• Limit loss relief
• A&M trusts
• Double your pension money!

and much more can be located

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