The Association of Taxation Technicians (ATT) has welcomed improvements announced in the Budget papers to proposals for reform of small business taxation.
Yvette Nunn, President of the ATT said:
“The draft legislation for a simpler system of income tax for small businesses had many features which made it look very unattractive. The changes announced today go some way to salvaging the concept. We welcome in particular the abandonment of the mandatory use of fixed-rate motoring expenses which could have been a stumbling block for many potential users of the proposed scheme.
“Whilst the rules are likely to remain more complicated than they needed to be it is also good to see that HMRC has listened to advice from bodies like the ATT and scrapped the idea of traders who take an item from stock for personal use having to account for the profit they would have made if they had sold the item. This idea (the Sharkey v Wernher principle in tax-speak) is difficult to explain and apply in a complex business; it had no place in a simple system.”
Notes to Editors
- The proposed simpler system is intended to provide sole traders and partnerships who have low turnover with a simpler method of calculating their taxable income by using a cash-in - cash-out basis which does away with year-end adjustments for debtors and creditors and permits various expenses to be claimed on a fixed-scale basis. It has been strongly criticised both for its complexity and its imposition of arbitrary adjustments.