The new Office of Tax Simplification has been set up to provide expert advice to the chancellor in time for the next budget to allow the government to simplify the tax system, including looking at the complex and confusing IR35 legislation. Their plan is to increase the UK’s business competitiveness, decrease the time spent on tax administration and increase the government’s revenue. The increased revenue would be from reducing administration, reducing tax avoidance and, inevitably, by increasing certain taxes. But as Will Abbott of Randall & Payne, Gloucester, says: “The worry is that business tax breaks, which are hugely beneficial to businesses in Gloucestershire and in some cases, enable them to keep trading, may be lost in the simplification process.”

ACCA (the Association of Chartered Certified Accountants) is calling for more clarity around the PAYE system, income tax bands, VAT flat rates for small businesses, the employee benefits system and deductions from business tax profits.

Will Abbott agrees with ACCA, who believe that the Government should start with SMEs when designing taxation policies for business. “To make this initiative truly of benefit to businesses of all sizes, it is vital that the work of the Office of Tax Simplification remains politically independent and that its recommendations do not fall by the wayside as the Coalition Government shifts its focus to other areas of the UK economic recovery. Currently, the government has a top down approach for business tax but instead it should think small first. It needs to create a foundation of principles that can apply to all businesses, based on the needs of the smallest, with additional layers added for larger, more complex companies.”

Will comments: “We deal with many small businesses in Gloucestershire who are bogged down, bothered and baffled by endless time-consuming paperwork and they literally don’t have the time for that and running their business. Research in the UK demonstrates that tax administration is found to impose the heaviest burden on SMEs and we’ve found over the years that the smaller the business, the heavier the red tape cost. With more time to run their businesses, they have more chance of making money and therefore adding to the government’s coffers, so as long as it doesn’t include massive tax rises, simplification should work in everybody’s favour.”

For more information on business tax contact Will Abbott on 01452 723377.