BrewDog chief hits out at 'absurd' tax rules

• On the attack: BrewDog founders Martin Dickie and James Watt, left, who has called for 'a few simple changes' to VAT rebates and beer duty

In a letter to Her Majesty's Revenue & Customs (HMRC), Watt has called for "a few simple changes" to both VAT rebates and beer duty, which he argues would generate the same income for the taxman but which would allow small firms such as BrewDog to increase their UK trade.

In the letter, seen by Scotland on Sunday, Watt says delays in VAT rebates have forced his firm to spend more than 100,000 on a bottling machine from abroad rather than buying it from a UK supplier.

He says the UK's upfront beer duty compels brewers to send more than 70 per cent of their product to export markets where they do not have to pay taxes months before being paid by customers.

Watt said: "Both of the changes I suggested are not looking for a handout or financial help whatsoever. It would not reduce the amount of tax we pay by a single penny and would not reduce the amount of income collected by HMRC at all. However, simply by making a couple of basic timing and administrative changes we could ensure that start-up companies no longer have to look overseas to get the maximum bang for their limited buck."

Fraserburgh-based BrewDog is known for its publicity stunts and statements on alcohol policy. When the Portman Group, the drinks industry body that promotes responsible drinking, censured the firm for its high alcohol beers such as Tokyo and Sink The Bismarck, it produced a low-alcohol beer called Nanny State.

But Watt says this campaign is serious, as the growth of many small firms is being stymied by unnecessary tax rules. "A lot of people see the more audacious things we do, but there is definitely another side to our business which is that we are quite focused on what we want to achieve," said Watt.

He also hit out at HMRC's attitude to the small and medium enterprises (SME) sector. "They have this mentality that SMEs are so insignificant it is not worth the hassle to make these changes that would really help small companies. We grew 250 per cent last year and we will do the same again in 2011. We pay lots of tax and employ nearly 50 people, they should listen."

Colin Borland, public affairs manager for the Federation of Small Business Scotland, agreed to back Watt's campaign.

He said: "The tax system should not be a disincentive to UK investment by leaving vibrant, growing businesses short of cash."