Contractors could benefit from a range of tax competitiveness measures proposed by the Office of Tax Simplification (OTS) that include simplifying corporation and income tax, and streamlining all tax payments through a single ‘tax account’.
In the final instalment of its Competitiveness of UK tax administration review, the Review of the competitiveness of the UK Tax administration: final report, the OTS highlights that: “The areas we survey [in this report] cost businesses some £750 million annually in compliance costs.
“We want to produce recommendations which provide real and lasting simplifications for businesses, and to make it easier, cheaper and less time consuming for them to fulfil their tax obligations.”
ContractorCalculator CEO Dave Chaplin believes that many of the measures will never be adopted by government, despite the huge benefits they might bring to contractors and the wider business taxpaying community.
“Recommendation number four is to ‘harmonise’ income tax and National Insurance Contributions (NICs),” says Chaplin. “No government has had the courage to grasp that nettle so far, and I can’t see it happening in the current political climate.”
The OTS has developed nearly 50 recommendations as a result of its research. Out of the ten key recommendations, contractors are likely to benefit from:
- A review of the rules for calculating basic corporation tax and income tax, with a view to simplifying profits and replacing capital allowances
- Harmonising income tax and NICs and integrating as much as possible
- A review HMRC’s Real Time Initiative (RTI)
- Improve HMRC’s assistance to contractors through digital support services
- Streamlining all tax payments through a single tax account.
The OTS was originally commissioned by government to identify measures that would “improve the competitiveness of the UK’s tax administration”. This is so that the UK could move up the rankings in the World Bank’s Paying Taxes rankings, which are part of the bank’s Doing Business initiative.
The OTS does not believe that the UK will ever achieve a top ranking in the World Bank’s league table. However, it should set itself the achievable target to be top ten of the bank’s Paying Taxes rankings and it could be the most competitive tax regime in the G7.
Chaplin concludes: “Any measures to genuinely make tax simpler and more competitive will benefit contractors.”