Exercise to measure Red Tape burden

Research undertaken by accountants KPMG for HM Revenue & Customs (HMRC) claims that the burden of tax administration in the UK, at around 0.41 per cent of GDP, compares very favourably with other countries - the Netherlands and Denmark - that have used the same methodology.

KPMG's research says that '85 obligations relating to dealing with forms and returns impose 85 per cent of total costs, but that there is a large 'tail' of another 2,607 obligations that, although they only apply to a small number of businesses, collectively can cause irritation and contribute to an impression that the tax system is complex and difficult to understand.

It was announced in the Budget that, in line with the advice of businesses that sat on the advisory board of KPMG's research, 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 per cent over five years;
  
• Reducing the burden of dealing with HMRC's audits and inspections by 10 per cent over three years and at least 15 per cent over five years; and
  
• Establishing a new Administrative Burden Advisory Board, chaired by Teresa Graham, non-executive director of four businesses and Deputy Chair of the Better Regulation Commission, to work with HMRC on dealing with the complexity of the tax system.

Financial Secretary to the Treasury, John Healey MP, said: "HMRC will continue to work closely with business in future to further minimise administrative burdens."