The newly-launched Office of Tax Simplification has been on the road, polling financial advisers and small businesses across the country to find out their top gripes with the current state of taxation in the UK. Surprising no-one, IR35 topped the list, along with the nuances of Income Tax versus National Insurance, and the continually changing rules and regulation surrounding tax (for example, the recent closure of the offshore EBT loophole).

OTS Tax Director John Whiting said of the meetings -

“Some points we had already identified, but others provided real food for thought – it’s important we consider all ways to making taxation for small businesses in particular a little easier.”

It’s no secret that IR35 is a bone of extreme contention for the contracting community. The complexity of enforcement has led to some fairly ham-fisted court cases being brought by HMRC against contractors working perfectly legally. This was highlighted recently by the final completion of a seven-year court battle brought by HMRC against contractor Mark Fitzpatrick. Having been able to prove no mutuality of obligation, Mr. Fitzpatrick was deemed to be outside IR35, and dealt what the PCG termed a “significant bloody nose” to IR35 enforcement.

Although the incumbent coalition government may not be very popular with students or unions, they are certainly striking a chord with small business. Their pledges to overhaul the complex tax system could potentially save millions of pounds for SMEs across the country. Speaking last week, Government spokesman David Gauke commented on their approach to tax reform -

“We believe firmly in the benefits of consultation, especially in tax. There are well-established norms about the length of time we should consult for, and it seems only polite to adhere to them. So we will be a government of fewer, better thought-out reforms; one that engages business throughout policy development; and one that places a greater emphasis on simplification.”

Via AccountancyAge

Photo by Sharon Pak – CC