I don't know whether you are aware, the Treasury is undertaking a PBR Consultation on corporation tax calculations for smaller companies. HM Treasury Simplification Review

There is no doubt that there is a need for change in the way small businesses submit their accounts to HMRC (Corporation Tax) and Companies House (Abbreviated Accounts). Two different formats; different reporting rules and different methods of submission; all very confusing for small businesses. In many cases these complex documents require small businesses to seek the costly advice of Accountants and Tax Experts to prepare their accounts for them.

As a small business owner I keep my own accounts, submit my VAT returns online; submit my PAYE returns online; submit my Corporation Tax online; submit my Companies House returns online and even submit my own Self Assessment online. Other than the online VAT submission to HMRC and the Abbreviated Accounts submission to Companies House, all the other submissions expect the person submitting the information to be a Tax expert. They have not been designed for the small business owner. The online help information - in particular HMRC's Corporation Tax, is decidedly unhelpful and not working when you need it most. Being a logical engineer - not an accountant - makes submitting these documents tedious.

The proposal in the consultation would be to move away from accrual-based accounting to a 'near-cash' method. This would be a challenge for most of us non-accountants who have only just started to understand the accrual method.

HMRC has been in deep discussions with members of the software industry about the way the SME book-keeping and accounting packages could be changed for this new type of reporting. All of these changes would impact on small businesses - which would have to either upgrade or replace their current book-keeping systems. In most cases the software upgrade would also require a change of hardware. Costly for the small business customer - good news for the software and computer industry.

What the consultation does not specify is what form the 'IT Tool', that it refers to, would take to handle the preparation of the returns - could it be XBRL? The Government is determined to promote the wider use of XBRL - instead of sending summary information (as per Corporation Tax) the proposal is to receive detailed transaction information. Do SME's want the Government to have access to their detailed information? XBRL has been around for 10 years - with lots of promises but still little take-up. Everyone accepts that it is a difficult and costly technology to implement. It would stretch resources for both small businesses and the software industry if XBRL was used to implement these proposals.

The proposal would of course aim to take Accountants and Tax Advisors out of the process - I should imagine these folk are not well pleased! I understand that they would like to bury the proposal.

It's a shame really - what Companies House has achieved with its Abbreviated Accounts and its simple online filing facility (utilising XBRL) could easily be the template for a simplified structure for Corporation Tax. Pity HMRC wants to re-invent the wheel!