GOVERNMENT PLANS to reduce costs to business by £10bn will be unsuccessful unless they tackle the complexity and length of the tax code, the ICAEW has warned.
The chancellor and business secretary were informed in a letter that ICAEW wants a red tape challenge to apply to tax. Minimising the time small businesses spend on tax issues and contacting HMRC will allow time to focus on business expansion, the letter said.
A ‘one in, two out’ principle for regulation should be applied to tax law, and the Office of Tax Simplification to be provided with the appropriate resource to deliver on tax simplification and deregulation in next month’s post-election Budget.
Sajid Javid, business secretary, said that over the next five years at least £10bn of red tape will be cut in order to encourage business growth and improve exports.
ICAEW chief executive Michael Izza said: “With a slim majority, the government will have to work hard to make significant inroads to reduce the regulatory burden,” stating the “target will be missed” if tax complexity is ignored.
“It is now time to confirm a long term rate of the Annual Investment Allowance. Reaffirming the rate at £500,000 will provide stability and consistency to firms that like to plan and invest for the long term, and would kick-start the kind of investment needed to enable businesses to thrive,” he added.
Further ICAEW suggestions include allowing smaller employers with up to 50 employees to make all RTI reports and payments just once per month, as opposed to reporting to once on a specific day of the month.
It also suggests simplifying the auto enrolment process for employers with up to 25 employees, and recommends that HM Treasury employ a National Insurance Combination exemption for apprentices of all ages in small businesses, rather than just under 25s – as will be the case from April 2016.
The post-election Budget will be delivered by George Osborne on 8 July.
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