Start-up companies need to be given greater assistance with filing their tax returns, a report from the National Audit Office (NAO) has claimed.
The report revealed that new busineses and entrepreneurs were more likely to make mistakes when filing returns and more inclined to miss annual tax deadlines, incurring costly fines.
As a result of its findings, the NAO has called on the government to simplify the tax registration and filing process, in particular suggesting new businesses be given a unique identity number.
The identifier would link data on individual businesses across the different tax computer systems and help to give a clearer view of an individual company’s entire tax affairs.
The NAO estimates that if filing performance of new businesses were improved to the level of the general businesses population, an additional 119,000 start-ups would submit their returns on time.
Other countries such as Canada and Australia already issue identifiers to businesses to help them meet their tax obligations.
Sir John Bourn, head of the National Audit Office, said:
“Newly registered businesses are a diverse group, ranging from those setting up in business for the first time to those with previous business experience, so increasing tax compliance among this group requires a flexible approach which targets the differing needs of businesses.
“A unique identifier would link data on individual businesses across the different tax computer systems and help to give a clearer view of an individual business’ entire tax affairs. It would however take some time to introduce and involve significant costs.”
© Crimson Business Ltd. 2006
