ICAS: tax ‘simplification’ would complicate small company tax

Government proposals aimed at simplifying corporation tax calculations and
returns for smaller companies are likely to cause confusion and make accounts
more opaque, the Institute of Chartered Accountants of Scotland has warned.

A Treasury discussion document published in the pre-Budget Report last
November, which closed for responses last week, suggested that small companies
might base their statutory accounts on tax rules rather than generally accepted
accounting principles, or might be taxed by reference to cash flows rather than

ICAS has rejected the two options, arguing that they could complicate tax
returns simpler for small businesses, although possibly helping HM Revenue
& Customs, and would make company accounts less informative for others.

Donald Drysdale, assistant director of tax at ICAS, said: ‘Change in itself
can impose administrative burdens, while also causing uncertainty. Businesses,
especially small businesses, are facing commercial and financial uncertainties
as they try to survive through an exceptionally harsh recession. This is not the
time for Government to be overturning existing rules for the sake of it.’

ICAS has urged the government to abandon its plans and instead aim to
simplify tax compliance for all small businesses, whether incorporated or not,
ICAS said.

Applying the same measurement of taxable profits to companies and
unincorporated businesses would be an important step towards simplification,
ICAS added.

Further reading:

‘simplification’ would complicate small company tax, says ICAS

tax calculations and returns for smaller companies

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