Government has today unveiled a slew of recommendations designed to simplify tax for small businesses, including better sharing of data across departments and rejigging filing dates.
The Office for Tax Simplification (OTS), which published the recommendations aimed at companies with less than 10 employees, believes a tax system that applies the same set of rules to business giants as it does to smaller companies is disproportionate.
Recommendations from the OTS include aligning filing dates for different types of taxes, providing more support from HM Revenue & Customs (HMRC) in the evenings and at weekends and sharing information across government departments to avoid having small business owners provide the same data on multiple occasions.
"A company with a few staff should not face the same burdens as a multinational," said Angela Knight, chair of the OTS. "The OTS wants to cut the work and the worry for Britain’s 1.3 million incorporated microbusiness owners. Britain’s microbusinesses are spending too much of their time and money sorting out their tax or paying someone to do it for them."
The report also outlines areas for further work, including investigating whether it would more appropriate to tax the shareholders of the smallest companies rather than the company itself and calculating corporation tax on a cash basis for very small companies.
John Whiting, tax director at the OTS, added: "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."
However, Frank Haskew, head of the Tax Faculty at the Institute of Chartered Accountants in England and Wales, hit back, stating that government needs to do more to address the ever-growing tax administration burden if it is really serious about simplifying the system.
"Every time tax policy and the associated compliance rules change they create an admin burden," said Haskew. "The government must first look to simplify the UK tax code, which is currently one of the most complicated in the world. The government and HMRC must create an environment that works for entrepreneurs, businesses and individuals."
Shortly before appearing before a Public Accounts Committee hearing last month, Matt Brittin, president of Google Europe, Middle East and Africa, called for the rules governing international tax to be made simpler and clearer.
Earlier this year, Google faced criticism after agreeing with HMRC to pay £130m in unpaid corporation tax, with critics calling the arrangement a sweetheart deal.