A review into small company taxation by the Office of Tax Simplification (OTS) is kicking off with a questionnaire asking for feedback from affected stakeholders and tax agents on a number of issues and questions it plans to use as the framework for the review
The review will consider how the current tax system causes complexity and uncertainty for small incorporated businesses, focusing on ‘micro’ companies which it defines as having less than 10 people.
The review will look at corporation tax, VAT, stamp duty, business rates, PAYE, income tax, national insurance, excise duties, capital gains tax and inheritance tax.
As part of the detailed review, there will be a series of meetings with businesses, representative bodies, professional advisers and other stakeholders.
To create the provisional framework, the OTS has developed a number of areas for discussion and is now inviting comments on some or all of these topics from those who will not be involved directly with these meetings. This will be followed by some short survey questions at a later date.
The questions listed in the OTS consultation document are wide ranging and include asking small companies why they choose to incorporate; any issues around the transition to a new status; the tax problems faced by small companies at sale, death of a shareholder or key employee or at liquidation; and whether personal and business tax issues of small companies can or should be disentangled.
In a section covering administration, the OTS asks how well initial registration processes with Companies House and HMRC work; how online tax compliance could be made easier; the impact of HMRC’s move to digitalisation; and whether or not small companies feel that HMRC understands their activities and concerns. It also asks why small companies use agents and whether they should have to.
The consultation asks for views on different ways of taxing small companies, including a possible ‘look-through’ basis which would tax the shareholders directly on profits earned within a company as if they were self-employed, rather than taxing the company.
Responses can be emailed to [email protected] The deadline is 31 December 2015.
Details of the key questions for the OTS small company taxation review are here
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