The Association of Taxation Technicians (ATT) set out their views in the organisation’s response to draft clauses due to appear in Finance Bill 2013 on introduction of the ‘Cash basis for small businesses’.
ATT President Yvette Nunn said: “This is a good idea gone bad. Small firms regularly tell us that the burden of tax compliance is the bane of their lives. The Office of Tax Simplification came up with a good set of proposals to tackle this with a simplified ‘cash basis’ of accounting. But HM Revenue and Customs have redesigned it by adding unnecessary complications, denying access to valuable reliefs and making it generally less appealing. There is nothing simple about what is currently on the table.”
In their submission the ATT says: “We note with significant disappointment that the previous consultation process has produced only minimal amendments in the design details. We consider that features of the system as currently proposed will detract significantly from its appeal. We are concerned that a real opportunity to achieve genuine simplification is being squandered.
“Our central concern is that unless the system is sufficiently attractive to proprietors of small businesses, they will not elect to use it. In turn, the resulting low take-up will mean that the simpler system becomes a candidate for abolition and a golden opportunity will have been wasted.”
Yvette Nunn added: “The denial of sideways and early years’ loss relief will significantly limit the take-up of these proposals. It is hard to envisage any reasonably competent adviser recommending the simpler system if that might result in the denial of loss relief for their client.
“These proposals seem to be the worst of both worlds: a degree of complexity (to prevent tax leakage) that will be daunting to the really small business, and restrictions (in the interest of simplicity) that will make the system unattractive to the next level of business.
“These proposals will need a lot of work to salvage something useful and workable from them.”
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Susie Hughes © Shout99 2013