Her Majesty's Revenue and Customs (HMRC) have announced the latest steps to reduce the tax administration burden in the UK following the Budget announcement at the end of March.
Despite research by KPMG, which shows the burden of tax administration in the UK compares favourably with other countries using the same methods, including the Netherlands and Denmark, at just 0.41% of GDP, HMRC is aiming to reduce the complexity and size of the administration burden.
The research revealed just 85 requirements relating to dealing with forms and returns impose 85% of the total costs, however it also shows there is a large collection of another 2,607 obligations, which although they only apply to a small number of businesses, can collectively cause irritation and give the impression the tax system is complex and difficult to understand.
As a result of the research, part of the Administrative Burden Measurement Exercise launched in September 2005, HMRC are planning to tackle the administrative burden by:
- Reducing the burden of dealing with HMRC’s forms and returns by at least 10% over five years
- Reducing the burden of dealing with HMRC’s audits and inspections by 10% over three years and at least 15% over five years
- Establishing a new Administrative Burden Advisory Board, chaired by Teresa Graham, non-executive director of four businesses and deputy chair of the Better Regulation Commission, to work with HMRC on dealing with the complexity of the tax system.
John Healy MP, financial secretary to the Treasury, says: “HMRC will continue to work closely with business in future to further minimise administrative burdens.”
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