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The Revenue should follow the example of its American counterpart to reduce the compliance responsibilities placed on taxpayers, according to a senior tax partner at a leading firm of accountants.
In spite of the effects on the tax system being tested during legislation’s creation, George Bull of Baker Tilly said there remains a lack of understanding of whether members of the public will be able to handle the additional administrative responsibilities new rules present.
‘Anybody who studies the way in which tax law is made knows impact assessments are undertaken at key points in the process,’ said Mr Bull.
‘However, that says nothing about how real people – as individuals or as employees of businesses – will cope with the latest round of… red tape.’
He urged HMRC to instigate two admin-reducing measures, the first being a copy of one used by the USA's tax authority, the Internal Revenue Service (IRS).
IRS forms includes disclosures that set out how much time a person will have to spend, variously, understanding the requirements of the paperwork and obtaining training on how to complete it if necessary; obtaining the information needed to accurately complete the form; actually filling in the document and then filing it.
‘If UK tax forms carried these disclosures, the true burden of tax red tape would be visible. Onerous forms could then be improved or scrapped,’ claimed Mr Bull.
He also called for the Revenue to make use of two small teams of test subjects from outside the tax profession - one to act as a business and one as a family – to assess how well lay taxpayers will manage extra admin.
‘Before launching new forms and compliance obligations at a national level, try them out on the model family or model business to see how they get on,’ Mr Bull told the taxman.
‘Can they cope with latest requirements without unreasonable amounts of effort when added to all the other existing requirements? Are [the obligations] fair, or are they the straw that breaks the camel’s back?’
