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OTS sets sights on new business tax landscape

Report admits that constant changes to tax reporting system are part of the problem

3 March 2016

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Small businesses could become subject to a new tax reporting system that does not apply to any other business type.

The Office of Tax Simplification (OTS) has released a study that recommends bringing an end to the blanket approach taken to business tax reporting, which applies identically to multi-national companies as well as a sole trader.

Among the recommendations is aligning the filing of corporation tax, VAT, PAYE and annual returns to reduce the administrative burden.

'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,' commented Angela Knight, chair of the OTS.

'The tax system needs greater flexibility so that micro-businesses receive the benefits of incorporation (such as limited liability) but not the unnecessary administration burdens. This review sets out what changes can be made now and the next steps required.'

One of the biggest tax problems small businesses face is the ever changing tax reporting landscape, which means they're constantly having to catch up with new requirements and was touched on by the report.

'The constant changes to the tax system, even when intended to be beneficial, were a complication; stability of the tax system would be a significant simplification in its own right,' the OTS found.

The report also recommends greater cooperation between government departments to stop the duplication of efforts, 'taxing the profits from the smallest companies on the shareholders rather than the company' and simplifying the corporation tax computation.

 

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Tax & Wealth structuring