Business tax faces urgent call for government review

Business tax faces urgent call for government review

A review of how the tax system affects businesses is needed urgently, according to the government's Office of Tax Simplification.

The body has published a paper looking across the life of businesses. In it, the OFT recommended urgent work to simplify the business tax system to encourage growth.

The report assesses how well tax reliefs and charges achieve their objectives and considers how they interact with each other.

Its conclusion was the complex patchwork of tax charges and reliefs which apply at the various points in the business lifecycle would benefit from an overhaul to reduce complexity, make reliefs more accessible and allow businesses to fulfil their potential.

Paul Morton, tax director at the OTS, said: "This paper takes a significant first step towards meeting the pressing need to undertake a detailed review of the tax system as it operates across the business lifecycle.

"It is aimed at helping the businesses that are the lifeblood of the UK economy to maximise their opportunities and to make the system clear and simple to understand and use."

The paper focuses on two main areas: the operation of the Seed Enterprise Investment Scheme, Enterprise Investment Scheme and Venture Capital Trust schemes, and the interactions, and differences, between Entrepreneurs’ Relief, Capital Gains Tax gift relief and Inheritance Tax reliefs for business assets.

The OTS is now inviting views on these issues and so it can consider some of the areas in more depth in the future.

Angela Knight, chairman of the OTS, said: "This is a time when the need to encourage innovation, support growing businesses, the economy and employment in the UK, is a priority. It has never been so important that the business tax system is fit for this purpose and supports these aims."