The Treasury has launched an investigation to determine how red tape in the tax system is hampering small business growth.
The government has asked the Office of Tax Simplification (OTS) to carry out a review of the tax administration of small companies to identify changes that could be made to simplify and improve the process.
John Whiting, tax director for the OTS said: “It’s clear that many small businesses are struggling under the administrative burdens imposed by the UK tax system.
“We plan to set up surveys and more roadshows to really hone in on what steps cause the most difficulties – and how the system can be improved, making it easier for businesses to get things right with the minimum of fuss.”
The next stage of the project will closely examine small businesses’ experience of tax administration and their contact with HM Revenue and Customs at key stages of the annual tax cycle. It will also look at the tax administration processes involved in starting and growing a new business.
Meanwhile, the OTS is drafting terms of reference and will begin gathering evidence of taxation red tape, before reporting ahead of Budget 2012 and will also be putting forward further proposals for future simplification reviews to Ministers, aiming to announce its work plan for the next year by the summer.
In a letter to the OTS Chairman, the exchequer secretary to the Treasury, David Gauke MP, wrote:“The first OTS reports have provided the basis for some genuine moves towards a simpler tax system. To build on this excellent start, the chancellor and I would like the OTS to look at ways to improve the tax administration for small business.”