UK Small Businesses To Benefit From Simpler Tax System

by Jason Gorringe, Tax-News.com, London

01 December 2006

HM Revenue and Customs (HMRC) announced on Wednesday that it has launched plans to help small businesses settle their tax affairs more quickly and simply.

A new HMRC publication, 'Delivering a new relationship with business', details a package of reforms designed to transform its relationship with business, including measures to allow businesses to settle their tax affairs sooner, to reduce the burden of forms and inspections and to develop a single customer record.

By 2010-11, HMRC revealed that it will have implemented a clear delivery plan that:

• Aligns the enquiry window with the submission of the tax return, enabling businesses to settle their tax affairs sooner;
• Significantly reduces the administrative burden in dealing with tax obligations;
• Develops a single customer record, a vital step towards having a single business customer account that shows all of a company's dealings with HMRC in one place; and
• Streamlines the HMRC online filing system and improves further the services that it provides for agents and tax advisers.

Launching the report at the CBI Conference 2006, Financial Secretary to the Treasury, John Healey MP, explained that:

"Small and medium sized businesses are vital to the success of our economy and today's announcement shows the commitment of HM Revenue and Customs to provide them with a system that is efficient and tailored to meet their needs. The clear and ambitious four-year plan promises to deliver a real change from which small businesses should feel real benefits."

The report also details a series of initiatives HMRC has implemented over the past 18 months to help small businesses, including:

• A shortened four-page tax return for the smallest businesses;
• Removing from 300,000 employers the responsibility for paying tax credits to their employees;
• Reducing the number of forms to fill in - the withdrawal of Form 42 alone saving employers GBP200 a time; and
• Better tax code information ensuring that a million more employees are registered under the correct tax code from the outset.

The UK tax authority is also undertaking a consultation exercise on their work in creating a new management act that will modernise and simplify the legislative framework for the administration of taxes.

The views of taxpayers and tax professionals are being sought on the act's first draft clauses, proposed changes to the law, and information on costs and benefits.

Once formulated, the act will make it easier for taxpayers to understand and comply with their obligations, and for HMRC to conduct its operations.

The deadline for responses to the consultation is 20 February, 2007.

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