The Institute of Chartered Accountants of England and Wales has used its Budget submission to the Treasury today to call on the Chancellor to think carefully before launching any new initiatives.

Michael Izza, the institute’s chief executive, said: “Whatever Alistair Darling announces in the Budget, it could be a huge distraction for business when they need to concentrate on getting through this tough time. Too many times in the past we have seen changes brought in with disregard for the impact they have on UK companies and their competitiveness globally.” Businesses have been hit by unexpected tax changes as the Government has sought to respond to the recession, from the temporary VAT cut to the last-minute decision to reduce this year’s annual increase in business rates. There are also tax changes planned, from additional corporation tax for smaller companies to employers’ national insurance contributions. “VAT may also rise back beyond the 17.5pc as well,” said Ms Lagerberg.

Business lobby groups expect the Government to announce some action on access to finance and in dealing with the withdrawal of credit insurance cover. It may also decide to automatically enrol all qualifying businesses in England into its small business rate relief scheme.

This reduces the rates bills due on premises with a rateable value of between £5,000 and £15,000, but is under-used, with more than £200m in relief unclaimed each year.

The CBI has called on the Chancellor to rethink his plan to increase employers’ national insurance contributions to by 0.5 percentage points to 13.3pc in 2011, arguing that the tax-raising measure, designed in part to recoup the cost of the temporary VAT cut, would hit job creation at a time when unemployment will still be “very high”.

Russel Griggs, chairman of its Small and Medium Enterprise Council, said the Chancellor should address the imbalance in the way the tax system favours debt finance, the cost of which can be treated as a business expense, over the costs associated with raising equity finance, which cannot. “I think there should be a level playing field.” .

But Mr Griggs said the Chancellor’s main objective should be to deliver a Budget that helped restore business confidence, which he said remained weak.

He pointed to the decline in business demand for bank credit as a sign that investment decisions remained on hold and few companies were looking to expand. “You cannot under-estimate the damage that a drop in confidence will have on the economy,” he said.

This sentiment was echoed by Phil Orford, chief executive of the Forum of Private Business. “Rebuilding confidence is key to ensuring that small businesses are able to survive and, ultimately, as the economy recovers, begin to grow,” he said. “That means workable policies creating the right conditions for both small businesses and consumers.”

The forum has called for a range of measures, including the scrapping of April’s 2p fuel duty rise and planned rises due in 2010; for a freeze in the minimum wage and one percentage point cut in smaller company corporation tax to 20p.

The Federation of Small Businesses has lobbied the Chancellor to take “decisive action” to address the impact of the recession and the credit crunch on small businesses.

It has suggested a substantial increase in the personal income and national insurance tax thresholds to £10,000 to lift those on low incomes, including the self-employed, out of paying tax entirely.

To tackle the ongoing concern that banks are denying viable businesses access to the credit that they need to survive the recession, the FSB has also called for mediators to sit between banks and small businesses to help decide whether the business is viable. One senior bank source indicated that this idea would be resisted, suggesting the idea may not get off the drawing board.

Grant Thornton’s Ms Lagerberg said she expected the Chancellor to make “lots of positive noises” about the take-up of HM Revenue & Customs’ time to pay service, launched at the pre-Budget last autumn, and also to emphasise the availability of the £50,000 annual investment allowance, which is in its second year. The allowance lets any business write off up to £50,000 of qualifying expenditure against its taxable profits.

HMRC said that as of April 5 it had agreed to defer collection of over 106,000 individual business taxes, ranging from corporation tax to VAT, worth over £1.85bn.

Accountants speculate that there may also be more tax breaks to encourage investment in green technology to coincide with the Government’s first Green Budget, which is released alongside the main Budget.

What the Tories would do to help small businesses:

National Loan Guarantee Scheme: “We would introduce a big, bold and simple scheme to get credit flowing and save jobs. The Government would charge a fee to protect the taxpayer.”

Help with cash flow: “We are committed to cutting small company corporation tax rates from 22p [the planned rate for April 2010] to 20p. This will help reduce costs and ease cash flow and is fully funded as part of reforms to corporation tax. We will let companies defer VAT bills for up to six months at a reasonable rate of interest, injecting more than £10bn into the economy.”

Make the Small Business Rate Relief automatic: “That means scrapping the forms and bureaucracy of handling thousands of claims. It would provide help straight away by cutting the fixed overheads of small businesses every year. As businesses could be up to £1,100 better off, we have created a simple online tool. You can check if your business would be eligible by using the link: www.conservatives.com/smallshops.”

Help retain jobs: “We would cut payroll taxes for employers with fewer than five employees. A local firm with four employees and a wage bill of £150,000 would save £100 a month.”

Help small businesses win government contracts: “We want to open up the £125bn government procurement budget to small and medium-sized businesses. This would be done by cutting red tape, advertising all contracts worth over £10,000 online and simplifying the pre-qualification process.”

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