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SMEs and growing businesses could face a crippling cashflow problem if the
Government fails to address market failures and anomalies in the tax system,
the CBI has warned.
In its report on improving access to finance, the organisation said that gaps
were starting to emerge as venture capital firms seek less risky investments and
investors become less inclined to put money into innovations unlikely to make
high returns.
The CBI called for an increase in the rate of income tax relief for investments
in technology Venture Capital Trusts to 40%. The rate was cut to 30% in April.
In addition, the CBI said the Enterprise Investment Scheme, which allows
investors to offset 20% of their stake against income and capital gains tax,
should be extended to smaller quoted companies.
HM Revenue & Customs also came under fire, with the CBI demanding that it iron
out wrinkles in the research and development tax credits system that make it
difficult for some small firms to take advantage of the tax break.
John Cridland, CBI deputy director-general, commented: “The Government cannot
afford to stand back and admire its work.
"It must draw up a long-term strategy
so that more entrepreneurs can turn their business ideas into reality.
"The Treasury must prove its commitment to enterprise through actions, not just
words.”
The CBI also said that banks should consider offering unsecured loans to growing
firms, and urged entrepreneurs to do all they could to make sure their business
was ready for investment.
Source:
Credit
Control Journal
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