Small business compliance: The long haul begins
New consultation on reducing the tax compliance burden for small business addresses the questions business has asked, rather than assuming that "nanny knows best", a member of a new advisory group has told TaxZone.
Last December the Government announced the creation of a small business unit to ensure that the needs of small business lie at the heart of the new revenue department, expected to be created next month.
Now the Revenue and Customs have invited the views of small businesses and their advisers on a range of issues.
As TaxZone reported yesterday, a consultation paper, 'Working towards a new relationship: a consultation on priorities for reducing the administrative burden of the tax system on small business', was published jointly by the Inland Revenue and HM Customs and Excise on 16 March.
The Small Business Advisory Group formed to guide the work of the new unit met for the first time on 3 March.
The group's external members are:
- Francesca Lagerberg, chairman of the ICAEW's Small Business Tax Committee & deputy chairman of its Tax Faculty;
- William Sargent, joint chief executive of Framestore CFC & chairman of the Small Business Council;
- Steve Sharratt, chairman of "a number of small businesses" and vice chairman of the CBI's SME Council;
- Roger Southam, chairman and chief executive of the Chainbow Group;
- Simon Sweetman, vice chairman of the tax policy unit at the Federation of Small Business; and
- Martin Wyn Griffith, chief executive of the Small Business Service.
Risk assessment
The consultation paper was published alongside the Hampton review into the impact of inspection and enforcement of government regulations. That review highlighted the importance of risk assessment in reducing administrative costs for business.
Although the Revenue and Customs were not covered by that review, they observed that risk assesssment "has a vital role in the delivery of the tax system".
HMRC will "build upon progress already made in reducing compliance costs for small business by entrenching and embedding risk assessment in everything it does, from form filling to enforcement".
Objectives
In summary, the objectives of the reforms set out in the paper are to help small businesses, over time, to understand their tax liabilities more easily and:
- provide information to HMRC only once;
- spend less time dealing with inspections;
- benefit from a range of modern flexible payment options;
- enjoy a single point of contact with the new department; and
- have access to co-ordinated, clear and helpful support and education when and in the form they need it."
The paper recognises that achieving these outcomes will be challenging.
"Complex changes" to existing IT systems will be required. New computer systems will be needed to underpin "whole customer view", where contact between business and the department is "simple and streamlined, with business, their advisors, and officials having the same joined-up 'whole customer view' of all the affairs of a business".
Welcome
Simon Sweetman, a tax investigations specialist and a member of the new advisory group, told TaxZone that he very much welcomes the consultation.
"For a start it really talks about small businesses and means it, unlike so many references to 'small business' which mean businesses which fall somewhere short of multinationals, he said.
"It recognises that this is going to be a long haul and the changes to be made include changes in the Revenue's computer systems and, even more long term, the culture of the tax departments.
"It also addresses the questions that small business has asked rather than assuming that nanny knows best.
"It will be a long haul because there are changes to be made, some of them cultural - on both sides - and others which cannot be realised until the Revenue can drag some of its computer systems into the 21st century, or in some cases even the 1980s."
Andrew Goodall
Editor, TaxZone
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Replies (5)
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Working Together
I had a letter this morning inviting me to attend a "working together" workshop. I was so delighted - imagine somebody from the Revenue (PAYE compliance at that) wanted to listen to what I had to say.
Then I read further. "In the framework of the existing legislation" Back down to earth with a bang.
Summary
The Revenue published a three-page summary of the consultation on 18 March.
The consultation period ends on 30 June 2005.
Andrew Goodall
Editor, TaxZone
Welcome step
This has got to be a very welcome first step. Personally speaking, when I first heard about a "Small Business Advisory Group" in the context of the new HMCE/IR monolith, I assumed this was to refer to a panel of "feather-bedded" civil servants - hardly the best people to know what are the problems facing small businesses - and this was yet a further example of politicians spinning their endless yarns.
Let us hope that this administration now starts listening to businesses, rather than simply dictating to, which is their usual custom.
In addition to matters such as cutting down on compliance visits, what this country is gasping for is a complete overhaul and simplification of such things as the tax, payroll and tax credit systems (the latter which should never have been the responsibility of employers). Step forward the clown(s) who first dreamed this tax credit thingy up!!
Flying Pigs - agreed
Taking John Jenkins' point further, I would encourage everyone to download and read this consultative report, and respond to it.
Paragraph 2.4 comes out with the usual political 'crap', to quote "Recognising the importance of small business in the economy, since 1997 the Government has taken a number of steps to support small business by..." and it goes on to list the usual - small company zero starting rate, R&D, C/Gains effective rate (although conveniently ommitting to mention that this only applies to individuals), 40% FYA and "introducing a range of simplified tax schemes for small business.." (which I assume refers to the FRS, Annual and Cash VAT Accounting - the latter two were introduced by the previous Govt. I believe).
But what about the myriad of other regulations throttling small businesses which has been introduced by this 'New Labour' shower, such as the plethora of employment regulations, Health & Safety, Maternity & Paternity regs, tax credits, IR35, interpretation of S660 etc etc...
If this is a genuine real attempt to start "Working Towards a New Relationship" (the title of the document) then I welcome it. The title is also a tacit admission that the relationship has currently ceased to exist.
But if it is cynical electioneering, then shame on Blair, Brown and the rest of the gang!!
flying pigs
John, I share your hope, but do you think this government is really commited to helping the small business!!!!!!!!!!!!! So far I have seen nothing but destruction for them. Do you not think that a bit of electioneering is going on here.
If OL were to say that the £35b waste which they are getting rid of included loads of small business compliance I might even vote for him. Till then I'll vote for the "flying pig" party.