HMRC slashes red tape to simplify the tax system

HM Revenue and Customs (HMRC) is committed to making the tax system simpler.

Stephen Banyard, Director of HMRC's Business Customer Unit, said:

“Our aim is to improve our customers' experience and contribute to improving the UK business environment. We will reduce the administrative burden of the tax system on business and make changes that will make a noticeable difference to business.

“From April 2009, we are committed to reducing the administrative burden on business by at least 10 per cent by March 2011 – worth over £510m to them.”

This includes the delivery of tough targets on administrative burdens set by the Chancellor at Budget 2006.
• Reducing the administrative burden on businesses of dealing with HMRC's forms and returns by at least 10 per cent over five years
• Reducing the administrative burden on compliant businesses of dealing with HMRC's audits and inspections by 10 per cent over three years and at least 15 per cent over five years.

Mr Banyard continued: “To do this we would really welcome ideas and suggestions from those of you at the cutting edge of business. If you would like to suggest how we can change a process or form that would make running your business easier, please tell us at www.hmrc.gov.uk/better-regulation/feedback.htm.“

HMRC is also making it easier for businesses to understand and comply with their tax obligations, which will free up valuable time for them to spend on running, developing and growing their businesses.

So what does all this mean for UK business?
Since the targets were introduced, significant progress has been made, with a number of changes being implemented, including Simpler Reporting for Income Tax Self Assessment (ITSA).

In April 2009, the ITSA Three Line Account (TLA) turnover limit was increased to permanently align with the VAT threshold. This means a significant majority of the SA business population will be able to benefit from simpler reporting.

The new threshold will apply to the self-employment, trade and UK property pages from the 2009-10 Main Tax Return, short Tax Return and Partnership tax return issued from April 2010.

A free Online Tariff for businesses involved in Import & Export is now also available. The tariff was previously only available in hard copy purchased from HMRC. This saves businesses the £250 subscription fee and offers 40 more information guides and additional logic tools.

From April 2009, there will be a reduction in the number of occasions when employers need to complete form P46 (Car) when one company car is replaced with another.

In addition, an Annual Investment Allowance has been introduced. This is a 100 per cent tax allowance permitting business to deduct the whole cost of any plant or machinery they buy (except cars) from taxable profits, up to an annual amount of £50,000.

The department is also making continued improvement to Online facilities and customer support.

In his Budget statement the Chancellor announced further help for businesses facing difficulties in paying their tax under the Business Payment Support Service (BPSS). From April 2009, any viable business anticipating making a trading loss in the current tax year has been able to have the anticipated loss taken into account as part of any rescheduling of its Corporation Tax or Income Tax payments.

In addition, businesses that want to reschedule VAT, PAYE and national insurance contributions or who have already entered into a time to pay arrangement, but have found their circumstances have changed for the worse, can also contact the BPSS for a new or revised time-to-pay arrangement, depending on individual circumstances. Businesses can call HMRC and in most cases get a decision within 10 minutes on the help they can receive. Further information is available at: www.hmrc.gov.uk/pbr2008/business-payment.htm.

HMRC has also launched a series of “Start-up Diaries” – an online video diary following the progress of three businesses. They can be downloaded free from the Business Link website at www.businesslink.gov.uk/taxhelp. A selection of bite-sized video guides can also be downloaded for new and small businesses on a range of tax issues, including setting up in business, income tax for the self-employed, corporation tax and VAT.

The department's website also regularly carried podcasts covering items of interest to business and accountants.

HMRC has also created a Tax for Business “widget”, a free, online application which media can carry on their websites and which gives tax advice.

In addition, HMRC continues to work with the Administrative Burdens Advisory Board to identify issues that matter to business.

You can see details of what HMRC is doing to support businesses in the current economic climate in the department's Budget report Delivering a new relationship with business.

Posted Wednesday January 27^th 2010
By Stephen Banyard, Director of HMRC's Business Customer Unit