Simpler Income Tax for the Simplest Small Businesses – Finance Bill 2013 draft clauses
While we generally welcome proposals to make accounting and tax simpler for smaller businesses, we have concerns that the draft legislation makes the new cash basis far too complex for unrepresented small businesses and we recommend that clear and detailed guidance is provided to small businesses as soon as possible to enable business owners to make an informed decision on whether to use this new cash basis or the current accruals accounting basis.
LITRG strongly urge both HMRC and the Department for Work and Pensions (DWP) to reconsider their proposed cash accounting bases and attempt to align the two systems (the HMRC cash basis and the DWP Universal Credit cash accounting) as much as possible; failure to do so will result in Universal Credit claimants having to prepare monthly cash accounting calculations for their Universal Credit and a different cash basis calculation for their annual tax return. This is a serious business burden and one which the smaller businessman is unlikely to cope with well or at all.
All HMRC's documents relating to these draft clauses can be found here.
Follow the link below to read LITRG's response.
Contact: Robin Williamson (please use form at http://www.litrg.org.uk/ContactUs)