Government plans to make the tax system easy to use for small companies
Government has today published plans to make the tax system easy to use for small businesses.
The Office for Tax Simplification believes the current tax system is unequal and vows to overhaul it to make it work better for smaller businesses.
The turnaround is backed by a recent online survey showing micro-businesses, with less than 10 employees, using the same tax system as large multinational companies.
Recommendations from the OTS include combining filing dates together for different types of taxes, sharing of information by several government departments to avoid companies submitting the same details multiple times and HMRC providing support to small businesses at the weekend and evenings.
Chair of OTS, Angela Knight, said: “The UK has a growing number of small, incorporated businesses and helped by new technology and platforms, the trend is for people increasingly choosing to be their own boss rather than being an employee.
“The tax system needs greater flexibility so that micro-businesses receive the benefits of incorporation but not the unnecessary administration burdens.”
The review also acknowledged areas for further improvements, including looking at whether a shareholder’s profit should be taxed instead of the company itself and calculating corporation tax on a cash basis for smaller companies.
John Whiting, OTS Tax Director, said: “We need to do more work on these radical ideas and want to hear views on the outlines we have put forward in our report.”
Policy Director for the Federation of Small Businesses, Mike Cherry, comments on the report: ““Simplifying business taxation must now be a major priority for policy makers and we call on the Government to take a bold approach.
“The current tax system for small businesses remains overly complex, bureaucratic and hard for businesses to navigate. Many feel either forced to pay for expensive tax advice or run the risk of failing to comply.”