HMRC 'must change attitude to SME record keeping'
The taxman's plans to increase scrutiny on businesses' record keeping will need to be reviewed after the Office of Tax Simplification's recommendations for a simpler tax system
A SIMPLIFIED TAX SYSTEM for small businesses would require a change in attitude from HM Revenue & Customs, a leading tax expert has said.
George Bull, tax partner at Baker Tilly, said that HMRC has indicated it would focus on micro businesses as part of its plans to spot check business records. The taxman is currently consulting on the issue.
However, the Office of Tax Simplification has recommended a cutback in micro businesses’ record-keeping through the implementation of a special tax system for businesses with a turnover of less than £20,000 per year.
Bull said: “If the chancellor adopts this, HMRC ought to completely reassess how it plans to deploy resources to deal with record checks. The larger the business, the less likely record checks are to produce yields for the Revenue.
“HMRC may find it hard to ease the administrative burden for smaller businesses by standing back and just letting them have a turnover-based tax system. They might need to rein in their business record review checks completely.”
There was also a concern about the transition rules for moving from the one tax system to the other. “Whoever draws up the transition rules, I hope they are going to do it in a sensible and broad brush way.”