Guidance and advice
21. The Department aims to make it as easy as possible
for businesses to comply by providing clear and accessible guidance
and forms that are straightforward to complete. It spends over
£23 million a year providing a range of help through its
website, printed guidance, telephone helplines, workshops and
seminars. It is currently developing a new strategy to provide
clear, coordinated and helpful support at the right time to small
and medium enterprises, primarily targeting those that make unintentional
mistakes.[24]
22. In 2005-06 the Department spent over £6
million on providing 14,000 workshops and seminars which were
attended by nearly 75,000 business representatives or around 8%
of newly registered businesses. 98% of those attending felt more
confident in complying with their obligations as a result. On
average five people attend each workshop whereas the capacity
is up to 15. Workshops are held during normal business hours.
A pilot study in 2004 suggested there was little demand for workshops
at other times. Less than half of those who say they will attend
actually do so on the day. To make the educational material more
accessible to businesses the Department is considering whether
to provide it online. New businesses often seek advice from financial
advisers, accountants and Business Link, which provide channels
of contact the Department could use to help businesses register
and comply with their tax obligations.[25]
23. The Department produces guidance on Income Tax
Self Assessment, PAYE, VAT and Corporation Tax which is targeted
specifically at newly registered businesses. It is important that
information in booklets and leaflets can be understood by taxpayers
from a wide range of backgrounds and levels of education. But
the Department's guidance requires an average reading age of at
least 16 or 17 years. Over 5 million adults have literacy skills
well below this level. The high reading age is due partly to the
complexity of the subject and the use of technical terms to give
accurate advice but also to the use of long sentences and many
acronyms. The Department produces its forms in English and Welsh
only but offers an interpretation service to assist customers
whose first language is not English.[26]
24. The Department wants businesses to obtain tax
information of a general nature from its website. The website
is convenient for businesses to use because it is available seven
days a week, 24 hours a day. It is also cost effective for the
Department compared with telephone calls. The Department estimates
that the staff costs involved in running the website are £900,000
a year, and it has around 30 million hits a year.[27]
25. The Department recognised that its website is
not easy to use and plans to improve it by focusing on the most
heavily used sections. There was scope to improve the links to
information a business may need. The Business Link website provides
information for businesses across government and includes a number
of online tools to help businesses with their tax obligations,
which are easier to use than written guidance. One tool helps
businesses identify the dates when they need to file returns and
make payments to the Department and allows them to set up email
alerts based on the results. Since April 2007 the Department has
taken over responsibility for the Business Link website. The Report
on Service Transformation recommended that Business Link should
be recognised as the primary e-channel for business and offer
high quality services on a par with the best of the private sector.[28]
26. The Department operates three telephone helplines
to provide dedicated support to newly registered businesses at
an estimated cost of around £4 million a year. These offer
help to the newly self employed and new employers, and deal with
some three million telephone calls a year. It operates a further
7 helplines covering specific taxes that all businesses can contact
for information. The Report on Service Transformation recommended
one stop contact centres across government to meet business needs.
The Department is currently exploring the scope for reducing the
number of different helplines and telephone numbers to offer a
more joined up service, and in the longer term a single initial
point of telephone contact with the Department. It will need to
develop the technical and operational capability to provide helpline
staff with access to taxpayers' computer records for all taxes,
and to route enquiries to advisers with the requisite expert knowledge.[29]
Simplifying the requirements of
businesses
27. The Department recognises that the costs of compliance
can be more onerous for smaller businesses and that they have
most to gain from simplified requirements. In March 2005 the Department
issued a consultation document on Working towards a new relationship:
reducing the administrative burden of the tax system on small
business,[30]
which set out proposals for simplifying the relationship between
the Department and business to reduce costs. Since then the Department
has introduced a number of measures to simplify the tax requirements
for small businesses such as reducing the number of enquiries
about employees' tax affairs.[31]
28. In 2005-06 the Department estimated the administrative
burdens of the taxation system on businesses to be £5 billion
a year. The top ten obligations cost businesses £2.1 billion.
Businesses with less than 10 employees bear just over one half
of this burden. The Department has targets to reduce the administrative
burden on business of dealing with the Department's forms and
returns by at least 10% over a five year period. It also plans
to reduce the burden of its audits and inspections by 10% over
three years and at least 15% over five years.[32]
29. The Department offers a number of schemes, mainly
on VAT, aimed at simplifying the tax requirements for small businesses
(Figure 4). Take up by businesses has been low, although
there has been an increase in the last year on the VAT cash accounting
scheme. In April 2007 the Department increased the turnover limits
for eligible businesses to join the cash accounting scheme from
£825,000 to £1.6 million, and it expects take up to
increase further as a result. Businesses could make significant
cost savings by operating the VAT annual accounting scheme in
conjunction with the flat rate scheme. But only 1,800 do so. If
all eligible businesses took advantage of these schemes they would
save £50 million a year.[33]
Figure 4: Take up by businesses for the simplified schemes by the end of 31 March 2006
