Retailers and campaigners are demanding the government scraps proposals to introduce a new family business tax in next week's budget.
The plans, which the government says will tackle what it refers to as 'income shifting', will target jointly owned businesses and family businesses in particular, and would come into force from April 6.
It would apply to couples and family members who split the business between them as dividends but also pay additional salaries. The plans are thought to be an attempt to avoid a repeat of a tax battle lost by HM Revenue and Customs in the Court of Appeal against a small IT company, Arctic Systems, last year.
The tax office argued that the way husband and wife Geoff and Diana Jones had set up their business to minimise tax payments was illegal. The couple split the business between them, but paid Diana Jones a low salary. This reduced the tax payable on her salary, but also lowered the tax payable on the overall profits.
So far, close to 7,000 people have added their names to an online petition, organised by trade body The Professional Contractors Group, calling for the plans to be scrapped.
Londis retailer Ramesh Shingadia, from Southwater, West Sussex, said it would be unfair on thousands of small businesses if the new tax was introduced. He said: "With very small family-operated businesses it is part of the structure for family members to chip in when they are needed and receive payment. I think it would be very harsh and unfair to introduce this tax."
l Retailers can add their name to the petition against the 'income shifting' tax at The
campaign's website can be found at