Global accountancy body ACCA is calling on the tax authorities to think again before it asks for even more information from small business.
Responding to a joint consultation from HMRC and HM Treasury, Reporting company payments to participators – modernising the reporting framework, the Association of Chartered Certified Accountants (ACCA) acknowledged that the UK Government has a legitimate interest in reducing the small company tax gap.
But ACCA says that if implemented, proposals to report a whole array of transactions would adversely affect the majority of compliant taxpayers in pursuit of a minority of businesses. And it would have no impact on those businesses that flout tax rules.
Glenn Collins, head of technical and strategic engagement, ACCA UK, said:
“It is good to see that the Government is aware that most small businesses seek to operate responsibly and comply with their tax obligations.
“We support efforts to address the small company tax gap. However, before issuing the consultation HMRC should have carried out a more thorough evaluation of the current and future reporting obligations that small and some medium sized entities face and will face. This would have helped HMRC and HMT to develop more proportionate and targeted proposals.”
The current proposals for close companies would capture a vast range of transactions, a significant proportion of which are exempt from the charge based on their type or value and in respect of which no tax liability could ever arise. ACCA says it is disappointed that the proposals do not consider the information that HMRC and other departments already hold.
Lloyd Powell, head of ACCA Cymru/Wales, said:
“We believe that HMRC should present clear and costed evidence that the new proposals to demonstrate that the value to the Exchequer and society clearly outweighs the additional burden imposed upon compliant taxpayers.
“HMRC should recognise that taxpayers who are deliberately misreporting under the current regime could continue to misreport under any new regime, reducing any positive value it might have for HMRC.”
Instead of its flawed plans, ACCA says HMRC should explore the use of the iXBRL accounts, which every close company must file in conjunction with existing CTSA, ITSA and RTI returns.
Collins added:
“There is limited detail addressing the proposals’ impact on the wider reporting landscape, alignment with HMRC Charter principles, the duplication interaction with reporting obligations, and cost impacts on smaller businesses. This is below the standard that we would expect from HMRC.”
