OTS calls for ‘urgent review’ into how UK tax system affects businesses
In a new report, the Office of Tax Simplification (OTS) has called for the government to carry out ‘urgent work’ in order to simplify the business tax system for UK firms.
The OTS report focused on businesses owned by individuals and families, and examined how the tax system affects firms at each of the key stages of their development, from starting-up to disposal or cessation. The OTS’s stated aim was to ‘highlight the complexity entrepreneurs face when seeking to establish or grow a business’.
In the report, the tax reliefs and charges that apply to new and growing businesses were examined in order to ascertain how well they operate and whether they achieve their objectives.
The OTS concluded that the reliefs and charges would ‘benefit from an overhaul to reduce complexity’, which would help to make reliefs ‘more accessible’ to firms.
The regulatory body has urged the government to consider streamlining or simplifying a number of key reliefs in order to better help entrepreneurs in starting up and expanding their businesses.
The OTS has highlighted 12 key observations, focusing on two main areas: the operation of the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes; and Entrepreneurs’ Relief (ER), capital gains tax (CGT) gift relief and inheritance tax (IHT) reliefs for business.
The organisation has invited the views of businesses and the industry, and will ‘consider some of the areas touched upon in more depth in the future’.
Paul Morton, Tax Director at the OTS, said: ‘This paper takes 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.
‘It is aimed at helping the businesses that are the lifeblood of the UK economy to maximise their opportunities and to make the system clear and simple to understand and use.’