Tax simplification measures don’t go far enough says BDO

The Government’s commitment to simplifying the tax system is to be welcomed but the simplification measures announced this week don’t go far enough, according to accountancy and business advisory firm BDO.

Dawn Register, a tax dispute resolution partner at BDO said:

“The Government is right to focus its efforts on simplifying the current highly complex tax system. Taxpayers and agents alike are crying out for effective measures that would reduce bureaucratic burdens, increase efficiency and help people pay the right amount of tax at the right time.

“However, what has been announced to date appears to be more like tinkering around the edges rather than genuine simplification.

“We would prefer to see more fundamental reforms, particularly on major tax issues which would have a more significant impact - for example a review of IR35 to settle the question once and for all over whether people are employed or self-employed.

“Another area that hasn’t been addressed is the issue of fiscal drag. With allowances and thresholds frozen over many years, greater numbers of people have been dragged into the tax net or into higher tax bands. This has arguably created the biggest paperwork burden for individuals and small businesses because more of them need to file returns or deal with HMRC.

“Much more work is needed to genuinely reform tax administration. So far, these are small steps rather than giant leaps.

“That said, we do welcome efforts to take people out of filing personal tax returns, even if the numbers are relatively small. We also welcome more education for the public on their tax filing obligations.

“A further consultation launched this week on dispute resolution is also welcome given the need to reduce the time and resources spent on tax disputes by all parties - HMRC, taxpayers and their advisers.

“We welcome the review of using alternative dispute resolution (ADR) or mediation to consider how they can be used to prevent further cases going into tax tribunal unnecessarily. There are parallels and learning from other areas of law, for example in divorce and family law where mediation is commonplace prior to cases going through the court system.

“This could also speed up payments to Treasury as most tax appeals delay the payment of disputed amounts. The concern is whether extra resources will be given to both HMRC and the tribunal service longer term. In our view, further investment and training will be required. We also note the possibility of charging for HMRC's ADR service which may limit access and needs to be considered carefully.”

ENDS

Note to editors

BDO LLP operates in 18 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.

It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to mid-sized, entrepreneurially-spirited, high-growth businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.

BDO LLP is the UK member firm of the BDO international network.

BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 119,000 people working out of 1,800 offices worldwide. It has revenues of US$15bn.

Frank Shepherd
Tel: 07812 463601
Email: frank.x.shepherd@bdo.co.uk

Press office
Email: media@bdo.co.uk
www.bdo.co.uk