ACCOUNTANT BDO has joined calls for small companies to be exempted from paying corporation tax.

Experts at the firm claim there is a solid argument to drop the tax for companies with fewer than 50 staff. They have also called for steps to be taken to ease financial pressure on mid-market firms, who are regarded as the engine room for future economic growth.

BDO were echoing Centre for Policy Studies chairman Lord Saatchi's suggestion last month that corporation tax for businesses with fewer than 50 employees should be abolished, showing how the "awesome power of taxation can be used to the benefit of everyone" and allowing small firms to better compete with their larger counterparts.

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Such a move would "certainly be a step in the right direction", according to BDO, which said medium-sized enterprises are the most productive part of the Scottish private sector. BDO said the tax levied on small firms was "relatively low".

The accountancy firm cited Scottish Government data revealing that mid-market firms, with 50 to 249 staff, have a total turnover per employee of £137,766, compared with £73,215 for small businesses, and added that encouraging their growth was "essential".

But the Federation of Small Businesses (FSB) in Scotland pointed out fewer than half of all businesses with fewer than 50 employees were incorporated. It also wanted assurance personal taxation would not increase "significantly" as a result.

A spokesman said: "The FSB argues for the right environment to give smaller businesses the best chance of success."