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A review of tax administration for small business will be the next task for the Office of Tax Simplification (OTS), which will closely examine small firms' experiences and their contact with HMRC at key stages of the annual tax cycle.
The OTS will also look at the tax admin processes involved in starting and growing a new business. The office is drafting terms of reference and will shortly start gathering initial evidence of complexities, before reporting in the run-up to the next Budget.
‘Many businesses are struggling under the administrative burdens imposed by the UK tax system,’ said John Whiting, tax director for the OTS, which intends to set up surveys and roadshows to find out which areas cause the most difficulties and how the system can be improved.
Drawing on recent reports, the OTS will be putting forward to ministers further proposals for future simplification reviews, aiming to announce a workplan for the next year by this summer.
Ministers have agreed that the work on the review of tax reliefs is now formally concluded. However, the OTS’s previous report is still being studied and the office may return in future reviews to the areas of complexity highlighted.
Applauding the Treasury’s commitment to reducing the tax regime’s admin burden on small businesses, Alex Henderson, tax partner at PwC said, ‘Attention in this area is very welcome. It is a feature, perhaps little understood, that not only is a small manufacturing company potentially subject to all the same tax rules as the largest multinational, but there is additional anti-avoidance legislation that only applies to their type of company.
‘And they are obviously much less able to spare the resources to deal with the issues,' added Mr Henderson, whose fellow PwC tax partner Barry Murphy, said, ‘One of the real decision areas will be how to join up the separate processes currently in place for VAT, PAYE and corporation tax registration.
‘This is all part of delivering on the customer-centric promise from HMRC. Small businesses would also welcome more HMRC inspectors who understand and are responsive to the particular circumstances and challenges that firms face.’
