John Whiting of OTS to visit ICAS to discuss small company taxation

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Philip McNeil By Philip McNeill, Head of Taxation (Tax Practice and Small Business Taxes)

30 August 2016

The Office of Tax Simplification has recently published discussion papers on Sole Enterprise with Protected Assets (SEPA) and Look through company taxation.

Sole Enterprise with Protected Assets

The mnemonic SEPA is an unfortunate choice in Scotland, being already in use for the Scottish Environment Protection Agency.

SEPA would be an alternative legal business vehicle for small, sole proprietor businesses: potentially avoiding the need to incorporate. The overall aim of the proposals is to reduce the number of very small limited companies, while retaining some protection from creditors for small business owners.  

A key proposal would be that the SEPA user’s home would be protected against claims arising from the business. So we would have a business vehicle taxed as a sole-trader, but with some limited insolvency protection.

A number of questions remain, such as likely demand and whether such a structure could ever replace Personal Service Companies, so avoiding the complexity of IR35 intermediary rules.

Look through company taxation

The Look thorough company proposals are about a different way of taxing small companies. In essence small company profits would be charged to tax directly on the business owners.

There are a number of serious considerations here. If look though taxation were compulsory, might it disadvantage entrepreneurial business, as retained profits could not be sheltered within the company, but would be exposed to income tax at the marginal rate for the business owners?

Is there a demand for such a structure, or should there simply be a minimum size for incorporation?

Join the discussion

John Whiting of the OTS is coming to ICAS on Tuesday 6 September in the afternoon. If you would like to be part of the discussion, please contact us at

Alternatively, you may like to email us your views, or make your own response direct to OTS; ideally by 12 September.

The discussion papers are:


  • Tax

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