Recommendations for business tax administration

A report published recently by the Office of Tax Simplification (OTS) shows that the administration of corporation tax, VAT employers’ National Insurance (NI) and PAYE in the UK is competitive but that we can aspire to do better.

Entitled Review of the competitiveness of the UK Tax Administration, the report looked at how the competitiveness of the UK’s tax administration could be improved, with particular regard to the World Bank’s Paying Taxes report, which currently puts us 14th in its rankings.

The report has a number of recommendations aimed at improving the UK’s competitiveness and most of them focus on improving the time businesses take to comply with their tax responsibilities. The OTS therefore suggests that these could form the basis of a future ‘road map’ for tax reform.

Key recommendations from the report include reviewing the rules for the basic corporation tax computation to align more closely accounting and tax profits and eliminate many sundry adjustments. It also suggests replacing capital allowances with allowable depreciation and testing whether corporate capital gains could be largely abolished.

Other suggestions include taxing businesses on business profits rather than streaming trading and investment results and reviewing debt cap and transferring pricing rules to test their effectiveness and reduce the burdens they impose.

The report also recommends harmonising income tax and NI Contributions and integrating them as much as possible, as well as reviewing HM Revenue & Customs’ (HMRC) Real Time Information RTI) process, particularly around ‘on or before’ rules.

VAT also gets a mention in terms of smaller businesses, as the report suggests developing ways of giving greater certainty over VAT treatment for them.

The report concludes by suggesting that the assistance given to businesses should be improved, particularly through greater uses of digital communication channels.

Leave a Reply