FEATURE


ACCOUNTANCY SERVICES


Taxing situations


By Henry Ejdelbaum, Managing Director of AIMS Accountants for Business


Milton Friedman once said, “Hell hath no fury like a bureaucrat scorned”. Evidently someone upset an HMRC bureaucrat in recent years, as accounting and taxes are seemingly getting more and more complicated by the day as new measures are introduced. Tax has never exactly been easy to understand – if it


was there would be no need for accountants to exist. With Brexit to factor in as well, there’s no telling how complex the UK’s tax codes could be in years to come. But why is tax still so complicated, even though the


Government’s “Bonfire of regulations” seems to have actually had an impact on the amount of unnecessary legislation? Since 2014, the number of Statutory Instruments


issued per year has fallen by half. Given that the primary purpose of Statutory Instruments is to define exact regulations around various legal areas - they are what is usually being referred to when discussing the much- maligned “red tape” - that’s quite a significant drop in potentially arbitrary restrictions. However, despite over 1,500 fewer red-tape-adding


laws being passed a year, none of that is reflected in laws related to tax. There may be fewer instruments being implemented per year, but the damage seems to have already been done. The UK Tax Code is insanely long – at 2,700 pages it’s


more than double the length of all three Lord of the Rings books. But the supposed “bonfire” has barely scratched it.


‘The UK Tax Code is insanely long – at 2,700 pages it’s more than double the length of all three Lord of the Rings books’


52 business network February 2019


While a decrease in new legislation being added is definitely a welcome boon to prevent the Tax Code from becoming completely incomprehensible, what we really need is an actual culling of the code that takes out all the extraneous and outdated codes and simplifies them for the benefit of everyone. In a code that long, there must be hundreds of rules and regulations that were made years ago that either no longer apply or need updating for the modern world. Bringing these to light and excising or changing them as necessary would benefit accountants and businesses nationwide. At AIMS, we have something of a unique perspective


on how exactly the complexity of the Tax Code affects the businesses that it matters to most – SMEs. A big business usually has fleets of accountants that can help it avoid any pitfalls in the Tax Code, and has the resources to absorb the costs of most mistakes made. An SME doesn’t have that safety net – it’s easy for a minor mistake that falls foul of an arcane regulation to have a serious impact on a smaller business’s finances. This is part of the reason why we’ve made it our


mission to make tax as simple as possible for our clients - the simpler tax is to understand, the easier it is for both businesses and accountants to help each other. It’s disappointing to see that very little progress has been made in this area despite it being arguably the most complex part of the UK’s legal system. We can only hope that the future will bring a real


bonfire to tax legislation. With the SME sector growing nearly five times as fast as its larger counterparts, change now is needed more than ever, before the complexity of the Tax Code begins to have a serious impact on the development of the sector.


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