The government should create a new legal entity for small firms which will reduce the tax and regulatory burden on them, a group of MPs has claimed.
An early day motion drawn up by David Drew, Bob Spink and Peter Bottomley denounces the current limited company system as being an out date 19th century model.
Because of this, the government should create a new "suitable legal entity designed for use in the 21st century", the MPs said.
Doing so will free SMEs to "generate wealth and employment in the UK economy", the motion asserts.
However, speaking to Businesszone.co.uk, George Bull, head of tax at accounts Baker Tilly, claimed that such an entity would not work.
Mr Bull said: "How do you value the contribution of different people in a small business? You end up with the … problem of having to find a statutory method of measuring an individual contribution to a business."
In the budget last week, the government announced it is to delay the introduction of changes in the tax law relating to income shifting, a move welcomed by many small firms.
