BUSINESSES ARE WILLING to see their tax bills rise in support of a less complex tax system, according to research from BDO.
Before the release of the Autumn Statement, more than 500 businesses across the UK were surveyed, with 57% of business owners, finance directors and CEOs supporting tax simplification regardless of tax rises. Half of the respondents in the survey specifically called for an alignment of national insurance and income tax to help reduce the burden of administration.
David Brookes, tax partner at BDO, said: “With little room for tax changes or new reliefs amidst Brexit uncertainty, the chancellor must address simplification in his speech to help businesses succeed in the future.”
Almost 45% of respondents believe HMRC should continue with the OECD’s proposals to tackle tax avoidance by multinational companies, while an additional 25% say HMRC should be awarded more resources to use its existing powers effectively, for a fairer system.
Jonathan Riley, head of tax, Grant Thornton said: “Despite indications that any spending announcements will be careful, considered and targeted, we believe that there is room for measures that will help create a better environment for businesses.”
‘Don’t rock the boat’
Other advisers suggested that ‘not rocking the boat’ was preferable to tinkering, or making more fundamental changes, at this time.
Bill Dodwell, head of tax policy, Deloitte, added: “The chancellor is facing fewer calls for more taxes and tax reliefs and instead calls for fewer tax changes and a focus on simplification. It’s likely that this Autumn Statement will see neither major tax reductions nor spending increases.”
Additionally, Crowe Clark Whitehill released the results of its own Autumn Statement survey, which asked taxpayers what the chancellor can do to support them. The results showed 78% believe the tax system is unfit for purpose and 62% believe HMRC resources should be dedicated to achieving tax system simplification.
Laurence Field, head of tax, Crowe Clark Whitehill, said: “People want simplicity and fairness; however the more recent changes to the tax system do not reflect that, respondents have shown that this is where resources should be targeted.”
Theresa May recently outlined corporation tax cuts as well as high-tech reliefs to the CBI, pledged ahead of the Autumn Statement. Corporation tax is already lined up to be cut to 17% from 20% by 2020.
“SMEs will be hoping that the chancellor announces changes that are designed to boost business confidence,” said Stephen Hemmings, tax partner, Menzies.
“Further reductions in the headline rate of corporation tax are unlikely. However, it is possible that the chancellor might opt to boost consumer spending and grease the economy by cutting VAT for a temporary period. This could be beneficial in the short-term but could have an inflationary effect, encourage imports and increase the balance of payments deficit. This could be counterproductive in the longer term.”
The focus of creating an economy that “works for all” is a theme that was mentioned at the recent Conservative Party Conference.
BDO’s Brookes added: “The government’s message of creating an economy that works for all means something to more than 80% of respondents. The majority see it as giving everyone an equal opportunity to succeed, regardless of their background or education.”
The respondents to BDO’s survey thought the best ways to help young people were reducing or abolishing university fees, 27%, and creating more tax breaks to employ more school leavers, 23%. Theresa May’s earlier announcement about bringing back grammar schools was viewed as the least popular way of helping young people succeed.
Further, a third suggested the demand in road and rail infrastructure and 21% believed digital infrastructure should be a priority.
David Brookes concluded: “To truly create an economy that works for all, [the chancellor] must consider the needs of business. Progress on tax simplification would allow the Treasury to focus on brexit and business leaders to focus on growing their business for the long term.”
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Signed into law by president Barack Obama in 2010, the Dodd-Frank legislation has tightened regulation of the US financial system
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