Simplify accounting for micro-businesses, says tax body
Office of Tax Simplification wants simpler accounting regime for the smallest businesses to help them manage tax affairs
ACCOUNTING SHOULD be simplified for small businesses to help them better deal with their tax issues, according to the Office of Tax Simplification (OTS).
The OTS, which operates independently of the government, has flagged up three areas where the tax system for small businesses could be improved.
The smallest businesses, often sole traders operating with cash accounts, should be allowed to use receipts and payments accounting rather than comply with full UK GAAP, with more flat rate expense allowances available.
HM Revenue & Customs (HMRC) should enter into two-way email communication, better VAT rulings and provide a dedicated helpline for small businesses.
The tax system should be eased to allow small businesses to dis-incorporate, allowing businesses to reorganise with less admin burden.
John Whiting, tax director for the OTS, said: “There’s a strong case for a form of cash accounting and indeed we think that going further into a radically different way of calculating tax for the smallest businesses needs study.
“Overall, we think that the recommendations put forward today represent a common sense approach that would help to ease the burdens of thousands of the smallest businesses throughout the UK.”