OTS cash-based tax plan is ‘revolutionary’
Radical changes suggested by the Office of Tax Simplification could amount to a “complete revolution” in tax and accounting rules for small businesses, according to lecturers and TAXtv presenters Giles Mooney and Tim Good.
Some 3m unincorporated businesses in the UK have a turnover of £70,000 or less, including approximately 2m with a turnover of £20,000 or less, but they bear a “disproportionate burden” when dealing with their tax obligations. They are also the least likely group to have the “training, skills and time to cope with their obligations,” the OTS noted in its discussion paper on income tax for the smallest businesses.
A key suggestion in the paper would be to let the UK’s smallest businesses use cash accounting rather than Generally Accepted Accounting Principles to calculate their turnover for tax purposes.
Small businesses are already taxed on their turnover rather than profit in couuntries including France, Poland and South Africa, the OTS study noted.