Has Government gone mad? These days I have to say that on a weekly basis (if not a daily one) I genuinely think so. Totally potty in fact.

After losing Arctic Systems the Government within 24 hours threw its dummy out of the pram and said basically that after being told it was wrong by the courts (at a legal cost to the taxpayer at large of easily in excess of £500,000 and probably really in excess of £1,000,000) that it would instead now change the legislation that caused it to lose it's legal arguments re taxation of husband and wives who are both involved in family businesses so that effectively HMRC can levy higher taxes on dividends and "income shifting as it sees wants.

Politicians (and indeed HMRC) clearly do not actually live and work in the real world and very much in safe jobs totally out of touch with normal working people and those running their own businesses. Think I am wrong? You only have to look at Paul Grey being employed in the Cabinet Office within days of him resigning as Chairman of HMRC for losing 25 Million peoples bank details and other key personal information. A total joke frankly. Not becuase Paul Grey was actually personally responsible for losing the data necessarily but becuase what was the point of the resignation? He simple moved into another department he did not actually "resign" as a Civil Servant at all.  The direct line of management responsible for losing the data? Still employed? Almost certainly without a shadow of doubt. Now if this is not safe employment I have no idea what is?

For the next crazy mind blowing set of rules that will make the job of actually running your family business with any certainty almost impossible click on the link.

http://www.hm-treasury.gov.uk/media/1/D/consult_income_shifting.pdf for Government next "consultation" on proposals for change following the Arctic Systems defeat.

What truely amazes me is that Government is always harking on about how it supports the family? (Sorry had to break off for a minute laughing there).  

Basically we do really need some changes. Mr Brown and Alistair Darling. You want to make the tax system simple and transparent? Firstly NIC should be abolished. 

The flat rate of tax should then be changed to around 31% (i.e. tax and NIC combined). Employers NIC should also be abolished and replaced with "Employment Tax" of around 13%  i.e. the levy on businesses for taking the risk on of employing people it is very difficult to sack if they are rubbish at their job.

VAT "value added tax" should be abolished as it does not do what it says on the tin. i.e it does not Add any value to the product for the cunsumer. VAT should be replaced with a "Purchase Tax" (could be difficult under EU law but in the end it is only a name for the tax)

Fuel duty and the duties added to drinks and cigarettes, insurance etc. should also be abolished. These could be replaced with "Purchase Tax" on a simple banding basis.

At least then it would be clearer. If you work hard and as a consequence earn good money for arguments sake £100,000 a year. The tax you pay would be clearer.

Employment Tax on the employers is going to be around £11,000 so if you actually employ yourself you will effectively pay this tax.

Employee taxes would be around 40% or so (equivalent to tax and NIC under the current system) and if you employ yourself this would increase to around 47% over every penny you generate in income/profits. In all reality it is nearer 50%.

The constant attack on small businesses with IR35, S600 and other attacks like aggressive PAYE Compliance Reviews for example make it clear HMRC and the Government want to sqeeze more and more taxa out of small businesses.

The proposed "Value Shifting" regulations are just another attack in the same way. Instead of stealth taxes and uncertainty for taxpayers why not just simply the whole lot and cut the number of HMRC staff by 30% which would save a lot of money and introduce a very simple tax system that is much easier to work with and comply with.

Cutting 30% of HMRC staff would probably allow for 2% or 3% of taxes. If we also halved the number of MPs and made MPs far more accountable that would probably mean the overall tax could be cut by anything between 3% and 5%. Cut out a lot of other Government waste and probably a flat Tax rate would suffice.

Simple taxes? Not very likely as frankly uncertainty makes it easier for HMRC to try and enter by the back door. This is less public and crafty. This is frankly what we have come to be used to in the UK now so expect it to continue... and more than likely watch HMRC use dubious methods of "value shifting" to attack small businesses left right and centre (plus interest penalties and other fines on top no doubt).

UK Tax? I think the expression is that the Government could not run a **** up in a brewery which must be where most Treasury Minister spend most of their time me thinks!