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Simplifying taxation for small businesses has been a major focus for the Office of Tax Simplification (OTS) throughout its existence.

Facts of the case

The business, Karate World, provides instruction in martial arts. It was originally set up by a Mr Thompson as a sole-trader business, with a number of employees.

Currently, and for most of the lifetime of income tax, income has been taxed at higher rates than capital receipts.

Encouraging investment in unquoted trading companies has been a theme in many recent and not so recent Budgets.