Plea to make tax simpler

The Admin Burdens Advisory Board’s (ABAB) chair, Teresa Graham, has singled out business record checks, real time information reporting of PAYE (RTI) and the cash basis for business income tax for creating difficulties for small businesses say Harris & Co accountants Northampton, the specialist small business accountants

The board, whose remit is to help support HMRC make ‘material improvements’ in tax administration, has sent a letter to Treasury secretary David Gauke, saying that although the headline assessment shows HMRC making ‘welcome and significant’ improvements, ‘there is still much to be done to arrive at a simpler and easier system for small business’.

ABAB"s report cited the implementation of Real Time Information (RTI), the introduction of the new cash basis rules for business income tax, and the introduction of Business Record Checks as areas that are posing severe difficulties for small businesses.

On RTI, Graham said it was ‘disappointing’ that ABAB had not been included in discussions on its development and introduction from the start and said that ‘some of the problems encountered during implementation could have been designed out, had external stakeholders (including ABAB) been listened to at a much earlier stage’.

Graham says the ABAB remains concerned about the representation of the benefits of RTI to business, noting: ‘In simple terms, whilst we can see some long-term gains, the costs to businesses in the interim seem to us to be significant.’

The ABAB is also concerned about how well some businesses are dealing with ‘on or before’ requirements under RTI and calls on HMRC to monitor this, with a survey this summer and in summer 2015 of small businesses to test how these rules work for them.

The new cash basis rules are criticised as being more complex than original proposals from the Office of Tax Simplification. ABAB’s report says: ‘We also feel that the rates at which the simplified expenses have been introduced make them unattractive to most businesses’.

ABAB has also criticised HMRC’s introduction of business record checks saying this ‘logical enough initiative was, in our view, launched with insufficient dialogue with business and the tax profession and without sufficient clarity as to its goals and the measurement of its impact’.

Overall, ABAB says that ‘HMRC should be consistently open to dialogue and engagement with the business and professional community from the earliest opportunity.’

Amongst its priorities for the coming year, ABAB says it wants to explore more radical simplification of the treatment of micro businesses; the introduction of a "single financial account" for small businesses with government; and further rationalisation and alignment of basic features of the tax system such as penalty regimes.