Tax system to be simplified for small firms

Chancellor George Osborne has launched the Office of Tax Simplification (OTS), a new body which he claims will "simplify the UK tax system with a focus on small businesses".

The OTS will be tasked with reducing the tax burden on British businesses, as well as streamlining the British tax code, which currently stretches to 11,000 pages long.

Chris Gorman, spokesperson for the Forum of Private Business (FPB), told BAD News: "The complication of Britain's tax system, which is considered second only to India's for its complexity, has long been a source of frustration, confusion and expense for Forum members. There is clearly a huge demand for tax simplification among small businesses and we wholeheartedly welcome the new Government's efforts to tackle the problem."

However, while small business representatives widely welcomed the announcement, some questioned how the simplification would work in practice. Mr Gorman added: "Much of the complexity inherent in the system is a result of attempts to stop tax avoidance. Obviously, the coalition will be desperate to avoid doing anything which could lead to a fall in tax receipts."

Mr Osborne said that the first task of the OTS will be to conduct two reviews. The first will be a general review of all tax reliefs, allowances and exemptions, while the second will look specifically at ways to simplify the tax system for small businesses, including finding a simpler alternative to the IR35 tax rules.

John Brazier, managing director of the Professional Contractors Group (PCG), which represents freelancers, also welcomed the announcement, in particular the initial focus on IR35. He said: "The fact that IR35 has been highlighted as a priority is good news. We will be working to ensure that this iniquitous tax will go and that all freelancers and small businesses will be able to operate within a fairer and more transparent tax system."

For more information on the OTS click here.

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