Business “does not understand tax system”

ALMOST TWO-THIRDS of UK companies are so confused by the current tax system that they are unclear as to what constitutes legitimate tax planning or whether they will be accused of tax evasion, a BDO survey has shown.

The research, which was supplemented by YouGovStone findings, showed that 65% of businesses found dealing with HM Revenue & Customs to be more burdensome than five years ago. Almost nine in ten – 88% – said that this would be less burdensome if tax systems were simplified.

Almost half of  respondents said that HMRC possess inadequate or poor commercial knowledge.

Stephen Herring, head of tax at BDO, said: “Both HMRC and UK businesses will save time, resources and money if the current tax framework is both clarified and appropriately enforced.” 

He added that the Budget should “set out a clear overarching framework for HMRC’s approach to business that is fit for purpose and clarifies what they consider to be meant by unacceptable artificial tax avoidance and what they accept to be  legitimate tax planning”.

An HMRC spokesman said: “HMRC recognises there is a difference between tax planning and avoidance. Our approach to protecting tax revenues means supporting those businesses that are open and honest with us by reducing the time they spend with us working on tax issues.

“All large businesses are provided with an HMRC customer relationship manager who will be happy to discuss transactions with them to get a better understanding of the commercial context and provide a view on the tax implications.”




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