OTS to review SME tax administration

THE ADMINISTRATION of small business taxation will be the next focus of the Office of Tax Simplification, Exchequer secretary to the Treasury David Gauke has announced.

Gauke wrote to chairman Michael Jack and tax director John Whiting (pictured) informing them that he would like the OTS to look “at ways to improve tax administration for small business”.

The review should “examine closely small businesses’ experience of tax administration and their contact with HMRC at key stages of their annual cycle”, Gauke said. “I would also like it to give specific consideration of the issues involved in starting and growing a new business.” The OTS will report on this before the 2012 Budget, he added.

The OTS would be encouraged to commission a survey or external research to support its work, the brief for the review said. The project will focus on small businesses – particularly unincorporated ones and those not represented by tax agents – and the larger ones that are represented by agents to compare the situations.

It will also look at the sources of complexity in the tax system, HM Revenue & Customs’ channels of communication, the clarity of information provided to taxpayers and specific areas of common error and concern in HMRC’s processes.

The government has also called on the office to develop proposals for further reviews to simplify the system to begin in the summer, including draft terms of reference, Gauke said.

Whiting said: “It’s clear that many small businesses are struggling under the administrative burdens imposed by the UK tax system. We plan to set up surveys and more roadshows to really home in on what steps cause the most difficulties and how the system can be improved, making it easier for businesses to get things right with the minimum of fuss.”