My friend hates paying income tax. He is also one of those people who did not do well at school. Nonetheless, he has a very acute mind.

When he went into business, he got into trouble with the tax people all the time. Finally, he went to see them and, in particular, he went to see a Mr Van Zyl (not his real name) to complain about the amount of money he was paying in tax.

Van Zyl pointed out that the tax claim was based on what my friend’s accountants had told the Receiver of Revenue in the matter of income and expenses and what was due was due. Van Zyl pointed out that, if the information had been presented in a different way, then there would have been a different result; in fact, the tax would have been reduced. Further, if the assets held by my friend were put into a holding trust, things would be much better. My friend then fired the accountants and employed Van Zyl to sort out the tax returns and accounts. Right now, my friend pays very little income tax, if any.

It is the intention of the Receiver of Revenue to get as much money as possible out of individuals and businesses. This is very difficult for small businesses because, if they want to retain their employees, they should pay as much as they can afford in salaries, but to do so and meet a high tax bill on revenue sufficient to pay the salaries is a tricky act. Thus, most businesses employ accountants to assist them. This is the same as having a pack of wolves at your door and employing armed guards to fight them off.

Over the years, the Receiver of Revenue has devised more and more means of extracting money from taxpayers; in theory, accountants understand these and work out tax avoidance schemes. This is not always so in practice, though. Often, all that accountants do is to cobble together statements of income and liability and pass them to the tax people with an estimate of tax due and the business has to pay the accountants and the tax amount.

For small businesses (and I run one), this is very difficult. For small engineering businesses where the principal engineer is clueless with regard to the financial aspects of running a business, it is a death spiral. The result is that one of three things happen: the engineering business limps along, hardly making a profit, and is finally sold when the owner retires for a pittance; the engineering business goes underground and stops paying tax completely; or the engineering business just goes under.

In a small engineering business, it is like six people rowing a boat. As long as they all pull together, they make progress; if one slackens off, the boat goes off course. The boat captain cannot kick a slacker overboard because this requires retrenchment payments and having to deal with the Commission for Conciliation, Mediation and Arbitration. At the same time, there are passengers on the boat, not rowing, these being the accountants and tax people.

The only good thing about the arrangement is that, in a small ship, it can be quite fun. Now replace this image with that of a Roman galley – there are 30 oarsmen chained to their oars, all rowing in time to the beat of a drum. It does not really matter if one of them is slacking, because nobody will notice. At the same time, the ship can carry any amount of nonproductive staff without a problem. The only downside is that it is not fun at all.

We should try to encourage small engineering businesses to succeed. The surest way to do this is to greatly simplify the way they pay tax, to reduce the taxes they pay and to simplify what they can claim as expenses against income. I am not sure how this can be done, but a thought is that, since all engineers keep time sheets, they should be able to have a claimable expense for time not spent in engineering design or manufacture. Or something. But, right now, if you are a small engineering business, you are suffering.