Family pubs could be stung by taxman

Pressure is mounting on the government to back down over new laws that could see the tax burden on family businesses increase by £200m.

More than 140 MPs have signed an Early Day Motion expressing concern over rules intended to tackle "income shifting", where joint owners of a firm divide profits to minimise their tax liability.

Under regulations, due to come into effect on April 6, profits will have to be shared out according to the contribution made by each individual.

It is thought the legislation will affect up to 300,000 businesses, including many family-run pubs.

Chief executive of the Federation of Licensed Victuallers' Associations, Tony Payne said: "You'd have thought a family business was a family business. This is just a little bit more cost and hard work for everyone."

John Brazier, managing director of the Professional Contractors Group, which is campaigning against the proposals, said the legislation was "conceptually retarded".

He said: "It's just not workable. Businesses will have to keep records of everybody's contribution to defend themselves against possible investigation. And how do you define that contribution? One partner may do the day-to-day running but the other might be the creative one with brilliant ideas.

"It really flies in the face of the government's supposed attempts to keep red tape to a minimum."

Graham Smith, licensee of the New George Inn, in Dorchester, added: "It's just another way of them getting more money out of you. We've never even taken a wage since I've been here and it would just be another expense to think about."