OTS calls for overhaul of ‘complex’ tax charges and reliefs

4 May 2018 - posted by: Prowting & Partners Accountants in Bristol

An overhaul of “the complex patchwork” of tax charges and reliefs affecting businesses throughout various stages of the business lifecycle is urgently required in order to stimulate growth among small and medium-sized enterprises (SMEs), the Office of Tax Simplification (OTS) has said.

In a report published midway through April, the OTS looked closely at business taxes, charges and reliefs, identifying a number of areas in which it believes simplification or streamlining ought to be considered.

In total, the OTS identified as many as 32 areas where it felt streamlining and simplification was needed.

12 of these were highlighted as priorities for immediate consideration, including, amongst others, the Entrepreneur’s Relief (ER) scheme, which the OTS said was ‘disincentivising’ some founder shareholders from bringing in external venture capital by requiring shareholders to hold a minimum of five per cent of a company’s share capital in order to be eligible for the relief.

Its report also criticised the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). It said that these schemes, along with the Venture Capital Trust (VCT) scheme, were not necessarily targeted effectively in line with the capital needs of future businesses and that ‘complexities’ built into the legislation governing them often caused confusion.

The OTS added that, while those who invest in start-up businesses through such schemes can benefit from several tax reliefs, these schemes do not currently provide any reliefs for the actual founders of the emerging businesses involved – something which the OTS said must be examined.

In addition, the report recommended that a ‘one-stop shop’ registration and filing facility be introduced for small incorporated businesses. Under existing rules, such businesses need to register separately with HM Revenue & Customs (HMRC) and with Companies House.

Paul Morton, Tax Director at the OTS, described the report as “a significant first step towards meeting the pressing need to undertake a detailed review of the tax system as it operates across the business lifecycle.”

He added that the paper was “aimed at helping the businesses that are the lifeblood of the UK economy to maximise their opportunities” by making Britain’s business tax system clearer and more “simple to understand and use.”

The report in full can be accessed here.

Link: OTS wants action on ‘patchwork’ of business tax reliefs

For more information about our accountancy, tax and business advisory services in Bristol, or to arrange an initial free meeting, please contact us.

Latest News

270,000 late penalty notices cancelled by the Revenue

A response to a freedom of information …
Read more

OTS calls for overhaul of ‘complex’ tax charges and reliefs

An overhaul of “the complex patchwork” …
Read more

READ MORE NEWS