Call for improved tax compliance system for mid-sized firms

By Anne-Marie Roberts, ICAS Assistant Director of Taxation

25 May 2015

ICAS says it is time to level the playing field and provide more tax compliance support for medium-sized companies.

Corporation tax compliance for medium sized companies

Download PDF [278 KB]

Main points

  • New business-friendly tax compliance system needed for medium-sized firms
  • Companies able to opt in to the new processes and dealt with by single HMRC team
  • The system would benefit companies and HMRC

ICAS believes that it is time to take a fresh look at corporation tax compliance for medium-sized businesses to design a compliance framework for the sector that is effective and deliverable. 

Changes made to the administration of the tax affairs of larger businesses have been in place for some time. This change has been effective and increased compliance by those companies – and it is time to level the playing field and provide more support for medium-sized companies who are a vital sector of the economy.

There has been acknowledgment of the issues for the sector by the UK Government – such as a proposal for support for businesses transitioning through key business stages and targeted support for the first claim for Research and Development (R&D) tax relief by a company.

These are welcome changes but ICAS members believe a more fundamental review of this area is required.

Our members have identified the following issues with the current systems:

  • The level of very detailed analysis required and finding the resources to collate this information
  • The level of resources available to HMRC to check returns from companies
  • Recognising the value of the independent audit of a company's accounts

The approach ICAS is recommending PDF [278 KB] focuses on evaluating the risk categories for medium-sized companies and extending the scope of self-assessment. A company would prepare a short document outlining its tax systems, processes and approaches.  This document would be agreed by the directors and shared with HMRC.  This would be an "opt in" process and companies would not be forced to adopt this process.

Companies who opt in would be dealt with by a single team within HMRC and given access to the team to deal with any issues that arise – a mirror to the Large Business Office arrangement for large companies which has been successful in increasing compliance and tax yield.  Companies who are participating will be required to maintain and verify controls and process – in the same way as larger businesses do under the Senior Accounting Officer regime. 

ICAS members believe that these changes would help both medium-sized companies and HMRC to target their resources effectively. 

Companies would be able to focus their finance teams on commercial objectives and HMRC would be able to focus resources on companies who do not have adequate processes. 

The tax gap figures produced by HMRC suggest that it is the small and medium-sized sector where the biggest proportion of tax is lost through non-compliance.


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  • Tax

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