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OTS recommends simplifications for small companies

Newsletter Issue - April 2016

The Office of Tax Simplification (OTS) has unveiled a package of recommendations aimed at making the tax system simpler and easier to use for small companies. The report, entitled Small company taxation review contains a mix of long range structural change ideas and simpler short term administrative improvements.

The recommended administrative changes include:

  • aligning filing and payment dates, e.g. VAT and PAYE, and annual returns and corporation tax;
  • HMRC providing extra support at weekends and evenings when more small company owners deal with their tax affairs;
  • stopping companies providing the same information to various government departments who instead should share the information; and
  • looking at the feasibility of having advance clearances for VAT.

The report sets out three main areas for further work:

  • testing whether taxing the profits from the smallest companies on the shareholders rather than the company ('look-through') could be simpler for some companies as well as addressing distortions in the system;
  • developing an outline for an new 'sole enterprise protected asset' (SEPA) vehicle which will give some limited liability protection without the need to formally incorporate; and
  • simplifying the corporation tax computation, eliminating many sundry tax allowances and potentially calculating corporation tax on a cash basis for the smallest companies.