OTS recommends simplifications for small companies
Newsletter Issue - April 2016
The Office of Tax Simplification (OTS) has unveiled a package of recommendations aimed at making the tax system simpler and easier to use for small companies. The report, entitled Small company taxation review contains a mix of long range structural change ideas and simpler short term administrative improvements.
The recommended administrative changes include:
- aligning filing and payment dates, e.g. VAT and PAYE, and annual returns and corporation tax;
- HMRC providing extra support at weekends and evenings when more small company owners deal with their tax affairs;
- stopping companies providing the same information to various government departments who instead should share the information; and
- looking at the feasibility of having advance clearances for VAT.
The report sets out three main areas for further work:
- testing whether taxing the profits from the smallest companies on the shareholders rather than the company ('look-through') could be simpler for some companies as well as addressing distortions in the system;
- developing an outline for an new 'sole enterprise protected asset' (SEPA) vehicle which will give some limited liability protection without the need to formally incorporate; and
- simplifying the corporation tax computation, eliminating many sundry tax allowances and potentially calculating corporation tax on a cash basis for the smallest companies.
