Media coverage of corporate tax affairs is almost exclusively reserved for underpayment of tax linked to remote offshore havens. However, while complex tax laws (and their accompanying loopholes) may help some avoid tax, it often means others end up paying more than they owe.
HMRC’s blind eye also conveniently misses calls from experts to simplify a tax system that places the burden of navigating the law wholly on the shoulders of businesses. In this year’s Budget the Chancellor confirmed plans to ‘make tax digital’ including the administration and payment of business taxes via a new online portal. Moving away from a decades old system inevitably will throw
some off, and for the less digitally literate the new online tax platform will introduce a new layer of complexity to a system that is already difficult to keep up with.
In a similar move, the government announced plans to abandon the universal business rate, meaning business rates would no longer be calculated using the same multiplier up and down the country. Instead, councils and city mayors will be able to adjust the poundage rate in their locality to reduce, or in the case of mayors, raise business rates. This may not rock the boat too much for the minority of ratepayers who own one property but it will wreck havoc for the hundreds of thousands with properties spanning different local authorities who now have to keep abreast of fluctuating poundage rates across the country. In other news, the rating consultancy business is booming.
From empty rate relief; to small business rate relief; to rural rate relief; to charitable rate relief; to businesses exempt because they may fall in to a particular enterprise zone – knowing whether you might be eligible for a reduced business rate bill can be a financial lottery. Of course, this hits SME’s harder as they often do not have retained surveyors or agencies on hand to tell them if they might qualify for one of these many tax breaks.
Qualifying thresholds have been readjusted at every Budget and Autumn Statement in the last two years and for many, knowing whether they fall in between the perpetually shifting goalposts can be near impossible, provided they even know about these reliefs in the first place.
Recent reforms to the business rates system – smuggled through unnoticed in the recent Enterprise Bill while the chamber frittered away debating sessions over Sunday trading– have drastically curtailed ratepayers’ ability to challenge unfair rating assessments. A new tri-tiered appeals system will mean businesses don’t find out how the valuation office agency reached a tax assessment of their property until the final stages when the ratepayer has already submitted evidence and made their case for a rate reduction.
Either through intent or neglect, the Treasury presides over an increasingly complex system that is clouding the waters to the extent that millions of taxpayers are struggling to get a clear picture of what exactly they owe. The simple fact is that those that are less likely to be able to afford professional tax advice are those whose books are most likely to be hit by overpayment.