Having watched yesterday’s chancellor’s statement, I felt sorry that she had nowhere to go except to diminish the disadvantaged. For the Labour party to be doing this is extraordinary.
There are 12 million small businesses in the UK and most of them are, from a tax point of view, stitched up super tight but I do feel by allowing a little bit more fiscal flexibility. It could change things significantly. If 12 million small businesses had an extra £100,000 to spend on expenses that’s £1.2 trillion of money moving around the British economy
Tax loopholes, the very phrase sounds dodgy, like something muttered in the back of a Mayfair members’ club over a glass of warm brandy. But before we jump to conclusions, let’s pause for a moment and ask a slightly uncomfortable question, what if tax loopholes – or more kindly, *creative allowances*- are actually good for the economy?
Imagine this, I take a client out for a day’s fishing. Not because I’m angling for a trout, but because I’m trying to build a relationship, talk shop, and yes secure more business. But who really benefits? The chap who owns the boat, the company that provides the food, the bloke who drives us there, the pub we hit on the way back. That single expense ripples outward and supports a web of small businesses.
In the current climate, though? None of it’s allowable. Not unless the fish we caught also signed a consultancy agreement. The tax rules are so tight, so joyless, that unless you’re holding a meeting in a broom cupboard with receipts signed in blood, it’s not deductible.
This wasn’t always the case. Back in the post-war boom of the ’50s and ’60s, you could wine and dine, hire a car, wear a sharp suit, and put it all on the books—as long as you were doing “business.” Were some people taking the mick? Absolutely. But the money kept moving. Restaurants were full. Drivers had fares. Hotels had guests. Florists, caterers, tailors, events people – they all had work. And that wasn’t fraud. That was flow.
Take company cars, for example. These days, the tax on a vehicle benefit is so steep, it’s practically a deterrent. But more cars on the road means more jobs for mechanics, more fuel sold, more tyres replaced, more MOTs booked, more sausage rolls from the service station café. It’s all part of the grand machine. Why punish a business for choosing to participate?
The problem is, we’ve swung so far in the direction of “tightening up” that we’ve strangled the very thing we claim to support – enterprise. As Churchill said, ‘some people think free enterprise is a tiger to be shot, others think it’s a cow to be milked but it’s actually the horse that pulls the cart of society along’.
Small businesses, in particular, are being forced to shrink their spend and every time that happens, it’s the little guys who suffer. The independent restaurant that doesn’t get the booking, the driver who doesn’t get the fare, the boutique hotel that sits empty on a Wednesday night.
Letting businesses be a bit more… interpretive about what counts as an expense isn’t about encouraging fraud. It’s about encouraging confidence, it’s about keeping the cash flowing. Every pound spent, even under the comforting umbrella of “business development,” is a pound that ends up in someone else’s till. And that’s good for the economy.
So yes, “tax loopholes” may sound grubby. But many of them – especially the old-school, high-street, take-a-client-for-a-decent-lunch kind – weren’t just loopholes. They were lifelines.
Let’s stop punishing ambition and start celebrating it again. It’s time to bring back the art of the tasteful write-off and inject some much-needed life back into the economy.
