OTS evaluation and stock take note
The OTS has published a note evaluating its work on corporation tax and providing a stock take of its work on the taxation of self-employed people
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Details
The Office of Tax Simplification (OTS) has today published a note which provides
- an evaluation update on its Corporation tax review and its Accounting depreciation or capital allowances review
- a stock take of its work on personal service companies and self-employed people’s taxation
The OTS hopes that this note will be a useful contribution to current thinking, noting the Chancellor’s statement in conjunction with the 26 March 2020 announcement of the Covid-19 support package for self-employed people:
It is now much harder to justify the inconsistent contributions between people of different employment statuses. If we all want to benefit equally from state support, we must all pay in equally in future.
In particular the note highlights the following:
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Simpler tax for smaller companies: The OTS looks forward to contributing to any future work by HMRC on the recommendation to explore following the accounts more closely, at least for smaller companies, with only a minimum number of tax adjustments being required.
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Personal service companies: The OTS suggests renewed consideration of enabling a small personal service style business to operate through a UK limited company while being treated as transparent for tax, removing the business from corporation tax (salaries, dividends and loans to participators being ignored for tax purposes), together with the relative ease of a self-employment style tax calculation.
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Tax Administration: The OTS reiterates comments in its Tax reporting and payments review about the merit in HMRC doing more to enhance the personal tax account and to integrate it with the business tax account, to provide an end-to-end tax reporting and payment service and facilitate the simplification of tax administration for self-employed people.
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Employment and self-employment: The OTS is interested in the possibility of a statutory definition of employment for tax purposes being developed. This need not be an attempt simply to codify the current case law principles but could have different features.
The OTS is grateful for discussions with a range of stakeholders, including HMRC and HM Treasury, since the original reports were published, which have helped to inform this note, and will maintain an ongoing dialogue with them and other stakeholders about the ideas and suggestions highlighted here.
Notes for editors
The OTS is the independent adviser to government on tax simplification, challenging tax complexity to help all users of the tax system: it does not implement changes - these are a matter for government and for Parliament.
The OTS works to improve the experience of all who interact with the tax system. It aims to reduce the administrative burden - which is what people encounter in practice - as well as simplifying the rules. Simplification of the technical and administrative aspects of tax are each important, both to taxpayers and HMRC.
The OTS previously published an evaluation update on its 2017 VAT review in October 2019.
Press Enquiries only please contact Julie Gillespie, OTS Press Officer Phone: 03000 585028