The paper also proposes developing an integrated software package to help small businesses prepare financial information. This could allow managers to gain a better understanding of the trends in their businesses’ performance and help them plan for the future. The Policy team will be reviewing the discussion paper to see if a survey is necessary to gather member opinion. Follow this link for more information
RECOMMENDATIONS TO SIMPLIFY UK TAX SYSTEM FOR SMALL BUSINESSES
7 February 2012 Recommendations to ease the tax system burdens imposed on small businesses have been put to the Chancellor and published in a final report by the Office of Tax Simplification (OTS). The independent OTS has looked at the problems faced by the UK’s smallest businesses and recommendations include both technical and administrative simplifications and are made to help the small business sector deal more easily with their tax obligations. The OTS have focused this review on three key areas: · HMRC’s administration; · disincorporation; and · simplified taxation for the very smallest businesses (those with turnover under £30,000). The key recommendations for each area are: Tax Administration - the OTS has found clear scope for changes to be made in the way the tax system is run that will make a genuine difference. There is much that is working well, and HMRC already have a range of initiatives in hand that the OTS endorses, but the OTS has developed a range of practical changes. These will help in areas of raising awareness of the help that is available, improving communication, improving the relationships between HMRC and the small business community and ways to gives businesses more certainty about their tax affairs. Recommendations include the use of two-way email communication, better VAT rulings and information and a dedicated helpline for small businesses. Simplified taxation for the smallest businesses – the OTS established that for the very smallest business – often “one man bands” – cash accounts are widely used, whilst claiming for businesses expenses are disproportionately burdensome given the limited amounts often involved. The OTS therefore recommends that receipts and payments accounting is accepted, instead of full ‘GAAP’ accounts. The OTS also recommends a wider range of flat rate expense allowances be available. These methods should be the default option for qualifying businesses, with an “opt-out” allowing those to select the system that is most beneficial to them. Furthermore, the OTS recommends a full study is undertaken of a turnover tax as a possible alternative for the smallest businesses. Disincorporation – the OTS identified that a number of the smallest companies would like to ‘disincorporate’ and move to an unincorprated status. The current tax system mitigates against this, so the OTS has proposed the introduction of a tax relief so that companies can disincorporate without incurring significant tax cost. This would parallel the existing incorporation relief. This would have the dual benefit of reducing admin burdens whist facilitating business reorganisations allowing businesses to trade in their correct form. Read the full HM Treasury press release
CIPP Policy News Journal
09/10/2012, Page 19 of 234
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