CIOT: Small business tax report welcomed
The OTS report proposes the integration of income tax and national insurance contributions (NICs), and a radical new approach to taxation for the very smallest unincorporated businesses. It also sets out a series of options for dealing with the controversial IR35 legislation.
Anthony Thomas, CIOT Deputy President, said:
“I welcome the progress which the OTS has made in this area. There is a real need to simplify the way small businesses are taxed. Too often sticking plasters have been applied to problems when what was needed was a thorough review. Small firms should be able to make commercial decisions that are not distorted by hasty and ephemeral changes in tax policy.
“I am confident that members of CIOT will endorse the OTS comments on HMRC improving the handling of small business. There are a number of constructive suggestions for business to have a better experience when dealing with HMRC – not least the idea of a simplified tax scheme for the smallest businesses.
“As the OTS says, there are real simplification possibilities in combining NICs and IT. Full integration does raise major problems but that must not stop serious investigation of partial moves.”
With regard to IR35, Anthony Thomas added:
“The IR35 section of the report is a fair and balanced view of what is an almost intractable problem. It recognises that taxation is not the only (or even the main) driver towards individuals operating through a personal service company and therefore a tax-only solution cannot be the right answer. If the proposed business test can be formulated in a straightforward way – and we don’t underestimate the difficulties with this – then it could act as a very effective filter which would mean that a whole swathe of people would not have the worry of whether IR35 would apply to them or not.
“In a modern, flexible labour market, workers and engagers should be free to form the contractual relationships they choose, without having their arrangements second-guessed because the tax consequences of their choice differ from those of another possible arrangement.”
Notes for editors
1. The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.
The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.
The CIOT’s more than 15,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.
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George Crozier
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