Firms call for simpler tax code

A new report from the Institute of Directors (IoD) claims that the government’s tax officials must take into consideration the fact that many businesses and taxpayers are going to commit innocent mistakes when completing their tax forms, and this is largely because of their complexity.

Too many firms are paying penalties on such mistakes, yet most businesses are honest and want to pay the amounts required by law, the IoD said.

The report argues that many are unclear about what compliance means because the government “confuses” compliance with the law and “our paying the tax that they would like us to pay”.

“Ultimately taxpayers would be better able to comply with the law if it were simpler, said Richard Baron, the IoD’s head of taxation. “The most effective tools to maintain high levels of tax compliance are already in the government's hands. They just have to make the system simple and respect the honesty of the vast majority of taxpayers.

“To encourage an even greater environment of compliance, the Government should take the creation of HMRC as an opportunity to comprehensively reform the current tax system.”