30 November 2006

HM Revenue & Customs

http://www.hmrc.gov.uk

Reform of Small Business Tax System

Quicker and simpler tax system for small businesses

HM Revenue & Customs (HMRC) has launched plans to help small businesses settle their tax affairs more quickly and simply. The new HMRC publication, 'Delivering a new relationship with business', details a package of reforms designed to transform its relationship with business, including measures to allow businesses to settle their tax affairs sooner, to reduce the burden of forms and inspections and to develop a single customer record.

By 2010-11, HMRC will have implemented a clear delivery plan that:

* aligns the enquiry window with the submission of the tax return, enabling businesses to settle their tax affairs sooner;
* significantly reduces the administrative burden in dealing with tax obligations;
* develops a single customer record, a vital step towards having a single business customer account that shows all of a company's dealings with HMRC in one place; and
* streamlines the HMRC online filing system and improves further the services that it provides for agents and tax advisers.

Launching the report at the CBI Conference 2006, Financial Secretary to the Treasury, John Healey MP, said:

"Small and medium sized businesses are vital to the success of our economy and today's announcement shows the commitment of HM Revenue and Customs to provide them with a system that is efficient and tailored to meet their needs. The clear and ambitious four-year plan promises to deliver a real change from which small businesses should feel real benefits."

The report also details a series of initiatives HMRC has implemented over the past 18 months to help small businesses, including:
* a shortened four-page tax return for the smallest businesses;
* removing from 300,000 employers the responsibility for paying tax credits to their employees;
* reducing the number of forms to fill in - the withdrawal of Form 42 alone saving employers £200 a time; and
* better tax code information ensuring that a million more employees a registered under the correct tax code from the outset;

Paul Gray, acting Chairman of HMRC, said:
"We have made real progress in reducing the burdens on SMEs but I recognise we still have a lot to do to deliver the sort of step-change in customer experience that businesses are looking for. Today's paper details what we aim to achieve over the next four years to make the new relationship with business a reality."

HMRC are also undertaking a consultation exercise on their work in creating a new management act that will modernise and simplify the legislative framework for the administration of taxes.

Taxpayer's and tax professional's views are being sought on the act's first draft clauses, proposed changes to the law and information on costs and benefits.

Once formulated the act will make it easier for taxpayers to understand and comply with their obligations and for HMRC to conduct its operations.

Notes for editors

1. The document 'Delivering a new relationship with business' is available on HMRC's website: http://www.hmrc.gov.uk/better-regulation/related-links.htm

2. HMRC's targets are to reduce:
* by at least 10 per cent the administrative burden on business of dealing with HMRC forms and returns over a five year period and,
* reduce the burden on compliant businesses of dealing with HMRC's audits and inspections by 10 per cent over three years and by a further fifteen percent over fifteen years.

3. Details of the HMRC's consultation on developing a new management act together with draft clauses are available online at http://www.hmrc.gov.uk/nma/index.htm

4. The deadline for responses to the consultation is Tuesday 20 February 2007

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