Business Management zone
News
Small companies on brink of tax revolt
Small business owners are so unhappy with the tax system that many may soon refuse to comply with their legal obligations, a lobby organisation has claimed.In a stinging attack on the government, the Professional Contractors Group (PCG) warned that because the tax regime is so complex, uncertain and plagued by "sometimes strange and inconsistent...outcomes", the willingness of taxpayers to adhere to the rules "will begin to evaporate" with "small business taxation in particular...getting close to this dangerous territory".
In its 'position paper', the PCG, which represents contractors and consultants, accused the government of becoming "more aggressive" in its attempt to extract the maximum revenue saying ministers have "complicated the system substantially" in order to disguise high tax levels.
To correct the situation, the group demanded an immediate and independent review of small business taxation to work on new policies to be introduced during the next Parliament. After that, it added, there should be no significant structural changes made for a "substantial period".
PCG managing director John Brazier said: "Our new position paper represents a significant contribution to the debate around taxation in the UK.
"In it, we identify where the problems are, and some of the solutions; but what we really want to see is an independent review deciding the exact shape of new reforms in a genuinely consultative manner."
Number of comments: 9
AccountingWEB.co.uk 11-Jul-2008
Categories: Tax News, News
Times read: 6410
It used to be the case that a reasonably intelligent Jo(anna) Bloggs could understand their various taxes, even if they got an accountant to work it all out and then explain to them. But now it seems that if even a straightforward little business is involved, let alone a company car or pension contributions, it will be beyond most people's comprehension.
I started to hear myself saying that schools should do more to educate pupils about our tax system, but then I realised that I was putting the cart before the horse - it shouldn't be that complicated.
And how much does it cost to administer the complexity?
It's well known that HMRC mis-calculates a disgraceful proportion of self-assessment tax, perhaps because they don't understand either?
as to BMcF's comments on forms
has he forgotten those govt survey forms and employment questionnaires and the form 42 on top of rating and valuation and EU sales which you do not need to anyway and the receipt of notices saying you have yet to get around to filing out one of the above
go green and reduce the paper flow [ can we set up spam filters for .gov ? ]
You can find the PDF by Googling for "pcg sometimes strange and inconsistent outcomes".
Since some bits were quoted verbatim I just stole a few distinctive words and stuck PCG on the front.
I won't spoil your fun by posting a link !
I'd like to see it...but there's no link (and a note about a poll which is actually stuck across the text)...and nothing on the PCG website !
....this is badly needed, and all accountants with the balls to take on the revenue should support them.............sign us up . We are brassed off with the bullying attitude of the new HMRC, and self assessment is now dead.......welcome to the old days again. We are resorting more frequently to reporting HMRC to members of parliament and lodging formal complaints.
Well done PCG! Hopefully someone in The Treasury will take note and realise what has driven us to this dispair. Sudden changes in CGT, increases in CT, reducing the number of years we can go back and claim overpayments, more powers for HMRC officials, so called income splitting yet ministers can quite happily employ their wives, lovers, etc at whatever rate they seem to like, and so the list can go on! They have my full support although I unfortunately can not advise my client's to participate!!
Burdens on small companies are not limited to Corporation Tax - whilst the individual government departments see only their areas the small business it constantly filing returns of one sort or another, VAT, followed by P35 etc, then P11D, then VAT again, then Annual Corporation Tax, annual accounts, VAT (again), visits/queries on any on the above... it's a wonder they find any time to work!
I heard Michael Heseltine speak at a conference on regulation about 12 years ago - he was a Minister at the time - he said that the day was coming when a business could file all its returns simply by the press of a button on a computer. What a wally. Is this how government ministers really think? What hope is there for the small business when HMRC & the Governmnet have so little grasp of business reality?
I think it's dangerous to talk up the idea of deliberate non-compliance. That would lead to a downward spiral and even more unbalanced powers for HMRC than we are already facing.
Having said that, I recently explained (in a detailed article for Taxation magazine) why, after 25 years and reaching what I considered to be the top of my profession, I consciously decided to give up giving tax advice. Given my past roles in the profession this has been described as a sad indictment of the tax system.
In summary my reasons were focused largely around the increasing degree of frustration I felt with developments in tax legislation. I didn’t want to struggle any longer to keep on top of the constant tax changes, many of which seemed capricious, illogical and in danger of bringing our tax law into disrepute. I hated the caveats I felt it necessary to give to clients when I was being paid for my advice. If there were choices to be made I wanted to be able to indicate what I would do if I was the client, but I was finding that increasingly difficult to decide.
I’m sure that my frustrations were a direct consequence of three key developments in our tax system.
1 - The ever increasing complexity of our tax system that causes inequalities and inconsistencies.
2 – The ‘doublespeak’ of politicians and civil servants as regards our tax system
3 – The prospect of increased powers for HMRC without adequate safeguards for taxpayers.
Different people will react differently to such developments.
I know I'm not saying anything new here but I should be out of a job.
Small business should be able to handle the majority of theiir own VAT, CT, IT, NIC, PAYE etc
The complications which the non-expert gets wrong are usually to do with disguising the amount of tax levied. I'm even asked to help with Rates and the man in the street doesn't stand a chance with P11D's, Trusts and much more besides.
Come to think of it, my job is redundant. I should be helping them manage their businesses, but they can't afford to pay me on top of all the other duties.
