AAT urges government to ‘fix broken business rates system’

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The Association of Accounting Technicians (AAT) has urged the government to ‘fix the broken business rates system’.

The AAT advocates a complete overhaul of the system, stating that it is currently ‘unfit for purpose’. According to the professional body, the retail sector is ‘suffering significant problems’ as a result of rising business rates.

It has also suggested that, by 2023/24, the business rates system will have cost taxpayers £13 billion.

The AAT has outlined a handful of recommendations, which are designed to help tackle some of the ‘immediate problems’. These include carrying out revaluations annually, instead of every three years; removing plant and machinery from business rates calculations; and establishing a ‘cross-party, consultative approach’ to agreeing a fairer, simpler alternative to business rates.

‘The system is creaking at the seams – it’s a 20th century system trying to deal with 21st century problems, and needs wholesale reform,’ said Phil Hall, Head of Public Affairs and Public Policy at the AAT.

‘A cross-party consensus on reform would maximise the chances of long-term success and recognise that irrespective of political persuasion, most politicians genuinely want what’s best for businesses, large and small. An outcome that allows businesses to thrive is generally good for employment, consumers and the British economy.’

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SMEs ‘waiting 43 days to be paid by government contractors’, research suggests

Research carried out by online business finance supermarket Funding Options has suggested that UK small and medium-sized enterprises (SMEs) have to wait an average of 43 days to be paid by government contractors.

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Funding Options found that top government contractors took more than six weeks to pay their suppliers in 2017.

It warned that late payments can help to push small firms into insolvency. According to Funding Options, late payments have played a significant role in generating construction sector insolvencies: in the year to September 2018, 2,924 construction firms were declared insolvent – a rise when compared to the previous year’s figure of 2,645.

In 2015, the government vowed to pay 80% of its invoices in five days, and the rest within 30 days. However, the research has suggested that government contractors are failing to meet this target.

Commenting on the issue, Phil Hall, Head of Public Affairs and Public Policy at the Association of Accounting Technicians (AAT), said: ‘Government action to tackle this problem, from the voluntary payment code to compulsory but feeble reporting requirements – as well as the creation of a Small Business Commissioner with no real power – have all predictably failed to stem the scourge of late payments.’

AAT outlines proposals to ‘protect taxpayers from tax rises’

In a new report, the Association of Accounting Technicians (AAT) has outlined a range of proposals designed to help raise funds for the NHS without instigating tax rises.

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The publication of the report comes following the Prime Minister’s recent pledge to raise £20 billion per year for the NHS by 2023/24. In response to this, the Office for Budget Responsibility (OBR) warned that tax rises will be required in order to fund NHS budget increases.

According to the AAT, its proposals would ‘raise over £27 billion’ while protecting UK taxpayers from increased government borrowing or tax rises.

Within the report, the AAT has urged the government to simplify inheritance tax (IHT); abolish the Marriage Allowance; remove higher rate tax relief for pension contributions; and switch stamp duty liability from the buyer to the seller.

The AAT acknowledged that some of its recommendations would ‘raise significant political challenges’, but stated that the proposals ‘make financial sense’.

Commenting on the matter, Phil Hall, Head of Public Affairs and Public Policy at the AAT, said: ‘AAT’s recommendations will not clear the deficit or enable investment to be showered across the country, but they do identify over £27 billion of annual savings and deserve serious consideration as a worthwhile, credible and thought-provoking contribution to the UK taxation and investment debate.’

The report can be read in full here.

Inheritance tax ‘unnecessarily complicated’, states AAT

The Association of Accounting Technicians (AAT) has stated that inheritance tax (IHT) is ‘unnecessarily complicated’ and ‘widely misunderstood’.

Responding to a review of the tax by the Office of Tax Simplification (OTS), the AAT said that several IHT exemptions ‘could be scrapped’.

It argues that certain exemptions, such as gifts on marriage and gifts to political parties, are reliefs that the general public are ‘largely unaware of’, and should therefore be abolished.

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However, the AAT did state that the current nil-rate band should ‘stay the same’. Previously, some experts had called for the nil-rate band to rise from its current level of £325,000, but the AAT argues that ‘there are no sound economic reasons’ to increase it.

Commenting on the matter, Phil Hall, Head of Public Affairs and Public Policy at the AAT, said: ‘The simplest means of removing complexity around IHT would be to scrap it and rely solely on capital gains tax (CGT) as they have done in Australia since the 1970s.

‘This would be far simpler, and some might argue, a more meritocratic approach to taxation.’

The AAT’s comments on IHT come following the recent publication of a report by think tank the Resolution Foundation, in which it suggests that IHT should be abolished, and be replaced with a new ‘Lifetime Receipts Tax’.

As your accountants, we can carry out a professional review of your IHT planning needs. Please contact usfor more information.