Tax system 'not kind enough to firms'

The proposed HMRC charter has come in for criticism from company executives, who say it is among the reasons why the UK tax set-up is not as kind to businesses as it could be.

The document contains only high-level aspirations and has missed an opportunity to force tax officials to achieve specific service standards, according to bosses who were quizzed for a survey by the Institute of Directors (IoD).

The trade organisation has identified what it regards as ‘considerable’ scope for improvement to the business-friendliness of the country’s tax system, independently of the overall tax burden.

The IoD suggests that policy changes need to be considered much more carefully, after 69% of directors questioned said they believe that the effect on the economy of the 2009 Budget will be negative.

'There was no advance consultation on the 2009 measure that requires senior accounting officers to certify the state of their companies’ tax accounting systems,’ notes the institute. 'The objective is sound,' it adds, 'but the lack of advance consultation means the Government has blundered into imposing onerous new burdens.'

The results of the survey also include condemnation of levels of service by tax authorities, noting that there are significant failings in relation to more technically demanding types of work, which cannot be excused by cost-cutting.

‘The Revenue’s own staff survey makes it clear that there is plenty of scope to deliver better service for less money,’ claims the IoD, which goes on to complain about delays in HMRC making tax repayments to businesses.

The institute’s head of taxation, Richard Baron, remarked: ‘The UK’s tax system is reasonably business-friendly, but … governments should always consult on the principle of their proposals so as not to impose unanticipated burdens - and there is definitely scope to improve Revenue standards of service, while still reducing the costs of running the department.’

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