2009 – The year to be heard. By Rebecca Benneyworth

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Could this be the year when the ordinary accountant shapes future tax developments? Or am I dreaming an impossible dream?

We start 2009 as we have for the last few years, with numerous consultations open for comment before the Budget, and most practising accountants up to their eyes in tax returns. Those working in business are focused on surviving the current financial climate whether downturn or outright recession, most people in accountancy and tax have their minds far from esoteric consultations.

But in my view, this is the year for the ordinary accountant to make his voice heard. Some of the consultations will impact directly on your practice and your clients in the future, and your views can shape how the...

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15th Jan 2009 18:22

Missed their chance
Well Vaughan, they did have the benefit of my advice last year - rewind to pre-Budget 2007 and bring back the 10% starting band instead of fiddling with VAT, thereby a) avoiding VAT and flat-rate hassle b) avoiding those blasted exceptions with regard to interest on savings and c) avoiding having to recompense those on under 17k who lost out due to abolition of the band.
Much simpler.

Oh and d) targeting funds at those less well-off.

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15th Jan 2009 15:13

Clarity, certainty and consistancy
Simplification should start with clarity, certainty and consistancy.

Also if HM Government stopped using the tax system as a means of encouragement/discouragement for things it likes/dislikes it would help.

The income shifting rules for example, looked like encompassing every negative aspect possible.

I am always baffled as to why HMRC and their masters insist on treating companies so differently from unincorporated businesses. If a cashflow basis is applied just for companies what fun will some have running a partnership/sole trader in tandem with it? I spy anti-avoidance legislation or a major loophole there. Lack of consistancy strikes again.

I do wonder if the treasury thinks all sole traders are window cleaners or subbies and any "proper" business will be a company. Having started from this pre-conception, corporate legislation then seems to start on the basis that it will be applied to major plcs and then tweaked a bit for SMEs.

Simplicity also brings loopholes and unfairness. We only have to look at the new CGT regime for an example. Initially simple ,yes, unfair, maybe, loophole free, largely. And then along comes entrepreneuer's relief, simplicity bites the dust and we are looking at ways to make ER available when otherwise it may not be (ie using a "loophole"). On top of that 4.9% shareholders will argue that it is still most unfair.

It is alleged that the UK has the most complex tax structure in the world. Lets take a look at other countries and see how they operate and what lessons can be learned. Perhaps one day we can chuck our entire income tax/corporate tax system away and pinch another countries lock, stock and barrell! It's been done before.

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13th Jan 2009 18:18

Hear, hear !
"they should start by weeding out the existing complexity"

But sadly this is as unlikely to happen as a politician saying "Oops, I was wrong ..."

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12th Jan 2009 18:26

HMRC nonsense
I don't know what sort of mad hatters tea party dreamt this lot up.

Any such 'simplification' does not fit very well with many aspects of the current tax system, e.g. annual investment allowance, enhanced R&D, buying assets on HP, UITF40, expensive cars, disallowable entertainment, deposits received in advance, accruals and so on. So what useful statutory accounts would get shown to the bank or published at Companies House? What happens when the company gets bigger and no longer fits the small criteria? Under a cashflow basis will companies pay all their creditors on the last day of the year- including paying their accountants up front (!) in order to reduce taxable profits? Will these rules extend to the self-employed? probably not in which case the incorporation decision is further distorted.

There seems so much scope for confusion, avoidance and manipulation that there will need to be a raft of complex rules. More work for the accountants. Like Flat Rate VAT, companies will only go into it if it cuts the tax bill.

Most companies will still employ an accountant and so there will be minimal admin savings. Who really finds corporation tax compliance overly onerous?

If HMRC are serious about simplification they should start by weeding out the existing complexity in the small business tax system. How about exempting SME's from Employment Related Securities legisltation, abolishing P11D completion for non taxable travel etc? The list is endless.

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By nickja
12th Jan 2009 14:38

Re option 2
Not all companies have to prepare cash flows for banks so I fail to see how introducing a new cash based computation does anything but add to the burden of document preparation for many companies. Also, surely small companies need "proper" accounts to know where they are commercially so we'd finish up with accounts plus a new cash flow statement for tax/banks?

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