The research was undertaken for HM Revenue &
Customs (HMRC) with a view to cutting the red tape. It found that
85 form-filling obligations account for 86% of total costs; but a
further 2,607 obligations make up the remainder.
While most obligations only apply to a small number of
businesses, HMRC acknowledged in a statement today that,
"collectively these can cause irritation and contribute to an
impression that the tax system is complex and difficult to
understand."
The costs are divided by KPMG: 41% are attributed to internal
costs (i.e. the costs of activities that a business undertakes to
be compliant); 49% to external costs (i.e. the costs of working
with intermediaries – experts like KPMG itself); and 9% to
acquisition costs (the non-time costs incurred by business).
Unsurprisingly, KPMG also found that intermediaries are used
more when tax regulation is complicated and affects many
businesses. And the biggest single activity business has to carry
out is information gathering. Finding the underlying data behind
their accounting systems is more costly than anything else, it
seems.
Chancellor Gordon Brown announced in his Budget on 22nd March
that HMRC will tackle both aspects of the burden on business, by
reducing the burden on businesses of dealing with HMRC's forms and
returns by at least 10% over five years. The burden of dealing with
HMRC's audits and inspections will also be cut by 10% over three
years and at least 15% over five years.
A new Administrative Burden Advisory Board, to be chaired by
Teresa Graham, non-executive director of four businesses and Deputy
Chair of the Better Regulation Commission, is also being set up to
work with HMRC on dealing with the complexity of the tax
system.
Financial Secretary of the Treasury, John Healy MP, said today:
"HMRC will continue to work closely with business in future to
further minimise administrative burdens."
