Tax Simplification For Small Business
“Tax need not be taxing” so the saying goes but it can sometimes be difficult to cut through speculation, proposal and rumour and get to the heart of how tax should actually be calculated.
This is particularly true around Budget time when business organisations and interested parties are all engaged in putting forward their ideas and proposals in an attempt to influence the Chancellor of the Exchequer.
For example, at the time of writing the budget is only a day away and, whilst the CBI are concentrating on areas such as capital allowances and long term equity investments, the FSB is looking for a simplified small business tax regime which is centred on a single tax payment.
Adding to the mix, the Office of Tax Simplification (OTS) has issued its recommendations for simplifying tax for smaller companies. Containing “a mix of long range structural change ideas and simpler short term administrative improvements” the review recommends that the tax system is simplified so that micro businesses can receive the benefits of incorporation without the administrative burden.
Recommendations include aligning filing and payment dates; eliminating sundry tax allowances and potentially calculating corporation tax on a cash basis for the smallest companies.
One discussion area which has attracted headlines is the idea that profits from the smallest companies could be taxed on the shareholders rather than the company. This ‘look through’ idea was introduced in New Zealand in 2011, although a slow take-up there has been attributed to complex compliance obligations.
Whether this idea remains as a discussion point or comes into force, anything which simplifies the tax calculation burden for small businesses can only be seen as a positive move.
If you would like to speak to a tax adviser about how tax need not be taxing for your business, please contact Newshams Tax Advisers on 0800 211 8657 or email us at firstname.lastname@example.org.