July 20, 2010
In an effort to kick-start Britain’s laboured emergence from a deep recession, the government has pledged to simplify tax rules and the red tape currently stifling industries around the country.
The Office for Tax Simplification (OTS), a new body tasked with amending current legislation, will give ministers ideas for streamlining the nation’s tax system and "potential reform options".
By autumn, the OTS will make its first recommendations on tax reliefs, allowances and exemptions, with a view to introducing new regulations in time for next year’s annual Budget.
"The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated,” Exchequer Secretary, David Gauke, is expected to announce later this month.
"The Office for Tax Simplification will provide important advice that will help inform us in making the right reforms to the tax system that will help to pave the way to bringing more international business to the UK, which will give our economy the boost it so urgently needs in the years ahead."
Since taking office, the coalition government has already made several key changes to tax. On a general level, VAT has been raised to 20% to increase money flowing into the government and tackle the budget deficit. But businesses will welcome a reduction in Corporation Tax from the headline rate of 28% to 24% over the next four years.
"We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal,” added Mr Gauke.
However, despite the government’s aims, business owners have cast sceptic views over the OTS, adding that the coalition is not the first government to claim it will reduce red tape and tax beuracracy.
"[The tax office] is a long overdue initiative. The important thing now is to make sure that the Office achieves some early successes, and that it goes on achieving. Its recommendations must not end up stamped 'too difficult' or 'maybe in the longer term',” Richard Baron, Head of Taxation at the Institute of Directors commented.
Whatever the OTS’ findings, Britain’s business tax regulations look set for a wholesale shake-up and understanding future systems could be the difference between financial gains and losses over the coming years.
If you need help understanding the complexities of the current system, or advice when reform is eventually enforced, expert commercial solicitors are here to help solve any issues.
