Sole Enterprise with Protected Asset status
The Office of Tax Simplification (OTS) has published a final report on the potential for launching a new simple trading vehicle to offer a simpler route in tax and related areas for small business ventures. The report examined the possibility of launching a Sole Enterprise with Protected Asset or SEPA status for sole traders.
This status would allow sole traders to retain the simplicity of sole trader status but at the same time offer liability protection for a sole trader’s primary residence and possibly the individual’s pension fund. SEPA would not have a separate legal identity and the sole trader would continue to be taxed as is currently the case.
The OTS was established to provide advice to the Chancellor on simplifying the UK tax system. Whilst the OTS accepts that the tax simplification aspects of the idea are indirect the introduction of the SEPA status would simplify the tax and accounting requirements for unincorporated businesses by removing a key non-tax reason of limited liability protection for incorporation.
The OTS Final Report makes it clear that the case for SEPA’s introduction is not by any means cast iron but that the idea warrants further inspection. The OTS has recommended that the idea should be developed into a formal process giving careful consideration to some of the issues raised within the report.