The Institute of Chartered Acuntants in Stland (ICAS) has me out against the planned simplification of rporation tax, observing that the proposals would further mplicate small mpay taxation.

ICAS mments that there is a need for well-directed rctions in tax mpliance burdens on business, but the answer is not to be found in recent ernment proposals to change the way small mpanies prepare their acunts.

A Treasury discussion document published in the Pre-Budget Report on 24 November suggested that small mpanies might base their statutory acunts on tax rules rather than generally aepted acunting principles, or might be taxed by reference to cash flows rather than profits. Both options are rejected by ICAS on grounds that they offer no degree of simplification and, while possibly helping HM Revenue & Customs, would make mpany acunts less informative for other users.

Donald Drysdale, Assistant Director of Tax at ICAS, said, “Change in itself can impose administrative burdens, while also causing uncertainty. Businesses, especially small businesses, are facing mmercial and financial uncertainties as they try to survive through an exceptionally harsh recession. This is not the time for ernment to be overturning existing rules for the sake of it.

“The timing of this Treasury nsultation makes no sense. HMRC is investing heavily in new systems that will require all mpanies to file their acunts and tax mputations online by April 2011, using XBRL technology. This is placing heavy demands on mpanies and their software providers. Imposing further changes now by altering the basis of acunting for tax in small mpanies would cause nfusion and disillusionment.”

Calling on the ernment to abandon its ideas for altering small mpany acunting and tax rules, ICAS remmends instead that any future changes should aim to simplify tax mpliance for all small businesses, whether inrporated or not. It claims that applying the same measurement of taxable profits to mpanies and uninrporated businesses would be an important step towards simplification.