Business reeling under complexity of taxation

   

Two thirds of UK companies think the tax system has become more complicated over the last five years, a poll of business leaders released last week reveals.

Half of all respondents also claimed to be spending increasing amounts of money on tax planning and compliance, the GfK-NOP survey for the Institute of Directors (IoD), showed.

Richard Baron, Head of Taxation at the IoD, said:

“Complexity in the tax system absorbs resources, clouds commercial decisions and can make the UK a less attractive investment location. Along with over-regulation, complicated tax rules are choking the life out of small businesses.”

With many of the UK’s rival economies embracing sweeping tax reform the Government should take note of growing business concerns, the IoD said. Almost 60% of respondents to its survey thought the tax system was having a negative impact on the UK’s international competitiveness.

On employment tax, bosses highlighted benefits in kind; employees’ business expenses; national insurance; statutory sick pay and statutory maternity pay; and procedures for employees joining and leaving as most in need of simplification, the IoD said.

Richard Baron, added:

”There is no doubt our competitive advantage is being eroded by our Byzantine tax system. There is always plenty of space in Finance Bills for new legislation but never much room for sorting out problems with existing rules. But there is a better way. We propose specific improvements, both to policies and to policy-making procedures.”

On a more positive note the survey revealed some confidence from business in the new HM Revenue and Customs. While 63% of respondents said their relationship with HMRC had stayed the same over recent years, 18% thought it had actually got better.