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Warming the plate under the jelly28/11/2007. Source: AngelNews.
 As a small child I would go to my friends' birthday parties and hope that one day, at one of my own parties, out would come the most magnificent jelly - ruby red, shaped like a Walt Disney castle, tasting of sunshine soaked strawberries. The thought came back to me the other day as I pondered the whole issue of enterprise in this country. I am sure everyone, entrepreneur and investor alike, gets involved in enterprise because they are dreaming of having their very own jelly. And for the Labour government of course they were given it in 1997 by the Tories - not just the mould and the ingredients, but the full Monty and delivered on a shiny silver platter, writes AngelNews.
The platter is, without a doubt, the economic strength of the country, with a light dusting of regulation and tax - just enough to keep things running smoothly, enough to set-off the magnificence of the jelly, but not enough to affect the flavour.
Wise (and older) entrepreneurs I know who have been in the market for over a decade tell me that they spotted the problems with the platter and the dusting back in the late 1990s - small signs such as the government's implicit desire to support US$ exporters more than Euro-zone exporters. But for those who have started up their entrepreneurial businesses since 1997, it has been like going to that friend's party, seeing the jelly and realising that perhaps one day they could have one, even more magnificent for themselves one day. And for many they have either got one or are very, very close. Until recently that was, when they noticed that their great creation was about to suffer and suffer badly. Not because of what they were doing, but because someone has placed a candle under the platter and the dusting has turned into a blizzard.
I am sure that everyone was amazed that it should be the proposed changes to UK Taper Relief that washed the stardust out of our eyes. After all, as the Government is now putting it - the changes are only a reduction in a tax break from 90% to 82% - it doesn't seem so bad that way around does it? And growing businesses have for a long time been unfairly hit with tax - taxed on their profits because they cannot avoid by using clever tax schemes, taxed on creating jobs through Employers' National Insurance contributions, taxed with excessive business rates and increasingly taxed through the costs of bureaucracy.
But the changes have caused outrage for the mass of entrepreneurs (although there is the odd exception). We surveyed 60 AngelNews companies of all sizes about the issue and some others and this is what they told us:
- Stop treating us a stupid - depending on which type of tax you are talking about 71-88% of us thought about the ramification of taxes on our businesses when we were setting up our businesses
- The majority of us think that not only CGT, but also employers' National Insurance and business rates are currently too high.
- 76% of us do not think VAT is too high - (after all for most of us we are just passing it on as a cost)
- We are almost equally divided on whether Corporation Tax is too high or not, but 85% of us want the Government to reduce the ability of the largest corporations to avoid it.
- 75% of us believe that if you are currently abroad you will be negatively affected in your decision to set up a business in the UK now that the CGT rate will rise to 18%
- 81% of us think the Government does not give enough support to fast growing businesses.
- Until the pre-budget statement 62% of had not thought about taking our businesses abroad despite the possibility of better market opportunities, employment regulations and bigger market opportunities.
- Post the pre-budget statement that figure has fallen to 53%.
- Only 12% of us not going to change anything because we are happy with being in the UK. Either we are sensibly planning a move abroad or we are now planning to sell our businesses or over 55% feel we are currently disempowered from effect this sort of change over our business
- When we do go abroad eventually (that's 68% of us by the way) we will probably head for the US or Western Europe - we are not yet thinking about going to India or China in any but small numbers
- Half of us think the government could balance the books without harming smaller businesses by closing down Business Link and the Department of Business Enterprise and Regulatory Reform! 40% of us think the Government should reduce taxes so more people are prepared to pay them. 30% of us think government expenditure on the NHS etc should be reduced. 36% of us would like to see higher taxes on alcohol and tobacco.
- 91% of us think that the CGT changes will make it more difficult to raise money from angels from April 2008 onwards and 77% believe it has immediately been made it more difficult.
So thanks a lot Mr Darling! The only comfort you can take away from your action is that most people blame your party or Mr Brown for this rather than you personally.
What is amazing is that despite an overpowering sense of ill treatment, the respondents to our survey, when we asked what they will do when they sell their business, they said:
- 57% of us will use some of the profits to invest in another business;
- 31% of us will use some of the profits for charitable giving; and
- over 55% of us will use some of the profits to set up a business either in the UK or abroad; whilst only 16% of us will stay in the UK and retire.
So perhaps you can now also see the irony in the latest move by the government on CGT - where only over 55 year old retires will get an extra tax break.
To the people who are unsympathetic, I say that getting the perfect jelly to the table is more difficult than you can possibly imagine. Next time you take a spoonful of that delicious jelly remember that once upon a time the creator was probably just like one of the entrepreneurs whose comments you have just read. He will remember even if you don't.
For more information visit www.angelnews.co.uk
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