The Office of Tax Simplification (OTS) has published a paper that recommends urgent work to simplify the business tax system in the UK in a bid to encourage growth.
In its report, the OTS assesses how well tax reliefs and charges achieve their objectives, and considers how they interact with each other. It concludes that the ‘complex patchwork of tax charges and reliefs’ that apply at the various points in the business lifecycle would benefit from an overhaul to ‘reduce complexity, make reliefs more accessible and allow businesses to fulfil their potential’.
The paper focuses on two main areas – the operation of the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes, and the interactions, and differences, between Entrepreneurs’ Relief, Capital Gains Tax (CGT) gift relief and Inheritance Tax (IHT) reliefs for business assets.
As one of the report’s authors commented, the paper takes a significant first step towards meeting the “pressing need” to undertake a detailed review of the tax system.
He added that the paper is aimed at helping the businesses that are the lifeblood of the UK economy to maximise their opportunities. It is also hoped that the recommendations will help to make the system clear and simple for businesses to understand and use.
The OTS would now like to hear from interested parties about their views on the issues contained within the paper so that it can consider some of the areas in more depth at a later date.
Commenting on the publication of the paper, Chair of the OTS, Angela Knight, said that it is a priority for the Government to encourage innovation and support growing businesses, the economy and employment. It is therefore vital that the business tax system is fit for this purpose and supports these aims.