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MPs urge business tax update

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MPs are urging Revenue and Customs to update its multiple helplines and complex paper registration systems for new business taxpayers.

HM Revenue and Customs (HMRC) should introduce a single registration system and a unique identifer to help new businesses with the processes of paying taxes, according to MPs on the Public Accounts Committee.

"The last thing anyone starting a new business wants to do is spend a lot of time talking to the tax man," said committee chair Edward Leigh. "But new businesses are frustrated by having to register separately with HMRC for each and every tax they have to pay. This is because the department is hampered in having a separate computer system for each tax.

"It must push towards a system where a new business registers just once for all the taxes it must pay."

The committee's report finds that businesses have to provide the same information for income tax, PAYE, VAT and corporation tax, duplicating effort for them and the department.

Businesses also have to use a different reference number for each tax. Although HMRC is planning to introduce a "customer index" to link its data on taxpayers, this will not help to simplify tax affairs, according to the committee.

It calls for a "unique identifier", which would make it easier for businesses to deal with the department, as well as providing a basis for linking services across the department and eventually across government.

This view echoes a 2006 review of HMRC by Lord Cater of Coles, which stressed the importance of a single business identifier for tax, as well as for interactions with other departments.

Sir David Varney's report on service transformation also recommended steps to establish business identity and the capability to share relevant information to meet the government's commitment for businesses to provide information only once.

More than two-thirds of tax registrations in the UK are in paper form and the MPs' report says registration should be made available online, making it easier and cheaper for businesses and for the department.

HMRC currently operates a number of helplines for taxpayers. There are two helplines for newly self-employed people, one for employers and seven more covering different taxes for businesses. The committee says the department needs to work towards a one stop telephone system to cover all its taxes.

Tax authorities in Canada and Australia, which have single registration for all taxes so that businesses provide basic information only once, are cited in the report as examples of good practice.

Leigh said new businesses often fail to meet their tax obligations and the rates for filing tax returns are lower among new businesses.

"That's not surprising given the relative inexperience of many owners of new businesses and the competing pressures on their time," he said. "But it is vitally important that new businesses get the assistance and simplified requirements they need so that, right from the start, they can get their tax affairs in order and are well placed to continue to comply as their tax affairs become more complicated."

This article was originally published at Kablenet.

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