There is a government department, the Office of Tax Simplification (OTS), that has been charged with investigating ways that the UK’s tax rules can be changed to make them easier to understand and easier to use.
The OTS has recently issued a new report on the proposal to simplify the Corporation Tax assessment process for companies, particularly smaller concerns.
Their report sets out some significant steps towards creating what they describe as “a 21st-century Corporation Tax system in the UK”. The aim is to make the calculation of Corporation Tax simpler, with fewer changes and more time to plan. The report also recognises the importance of reducing the burdens on small business, and “keeping this country an attractive destination for trade and investment in a post Brexit world”.
The report takes an in-depth and innovative look across four broad themes:
- simpler tax for smaller companies
- aligning the tax rules more closely with accounting rules where appropriate
- simplifying tax relief for capital investment
- a range of further issues affecting the largest companies
It also highlights the links with HMRC’s work on Making Tax Digital, which offers a real impetus to move towards a simpler system by use of technology.
The OTS recommendations are not legislative changes, they are suggestions. These will now have to be taken up by the Treasury and HMRC to consider changes to tax law in future Budgets.
As business owners we’ll all have to wait and see what the OTS come up with and whether their changes do make things easier to understand. However, here at Jones Harris we would recommend that all small businesses who aren’t currently using a software accounting package make the transition as soon as they are able to, because sooner or later Making Tax Digital will come into force.