Welsh accountants are urging the Chancellor to simplify the UK tax system and tackle the growing tax gap, warning that increasing complexity is adding costs for businesses and making tax harder to administer and collect.
Leading global accountancy body, ACCA (the Association of Chartered Certified Accountants) which represents more than 100,000 UK members, is urging the Chancellor not to further hike taxes or pile on more regulatory costs, but to step back and focus on why we have such a phenomenal tax gap.
It wants a full scale review of the UK tax system – looking at the root causes of the Corporation Tax deficit to pinpoint where losses are heaviest and simplify the system for struggling businesses.
It believes the overly-complex tax system is a brake on growth and wants a long-term plan to simplify tax rules to reduce errors, increase tax income and reduce compliance costs.
In a pre-budget member survey, 65% revealed a negative view of the economy with just 4% positive – down from 29% in 2023. This collapse in confidence is exacerbated by firms feeling increasingly choked by state bureaucracy – three-quarters (73%) report their regulatory requirements have surged over the past 12 months, compared to 2% who saw a decrease.
The survey exposes Making Tax Digital (MTD) as the single most negative admin burden with little end user/consumer benefit by 30% of respondents. General reporting duplication (10%), systemic regulatory complexity (8%), looming workers' rights changes (7%) and Companies House verification processes (7%) were also heavily penalised for creating extra burden.
Reducing costs on business and creating the right conditions for growth must be priorities for the government said Lloyd Powell, head of ACCA Cymru/Wales:
“Our members are clear: a cocktail of spiralling costs, economic uncertainty and red tape has stalled growth and stagnated economic confidence. The complexity of the UK's tax system is holding back investment and economic growth.
“We believe it's crucial to better understand what drives confusion and problems with our tax system to identify the areas of biggest loss and the opportunities for reform or better education, especially around Corporation Tax.
“The government must focus their efforts on generating the right conditions for growth: provide a long-term plan for and start identifying ways to simplify the tax system to enable businesses to plan and invest to generate growth.”
On a more positive note, dissatisfaction with HMRC service levels have fallen from their worst levels in August 2024, when 89% of those surveyed said it had a negative impact on the productivity and efficiency of their organisation. That figure now stands at 54% in August 2026.
Lloyd added:
“A clear solution to help relieve pressure on HMRC would be to enable professionally qualified agents to undertake more tax-related tasks, such as altering tax codes, on behalf of taxpayers. Because they are regulated by their professional bodies, they uphold high ethical and professional standards that would ensure accountability in the system.
“Ensuring that certain tasks can only be undertaken by professional agents would also protect the system from ‘bad actors' who have been able to exploit loopholes caused by the complex tax landscape.”
Jonathan Ashworth, chief economist, ACCA UK, added:
“The Chancellor will have to strike a delicate balance in the Budget. While he will want to boost confidence among businesses and households, higher government borrowing costs mean that tax increases or spending cuts will likely be needed to stay within his self-imposed financial targets. Indeed, he will want to avoid spooking financial markets.”
