Small businesses' views on new Department

A new study published by the DTI's Small Business Service (SBS) sets out the views of small businesses regarding the current organisational changes to HM Customs and Excise, Inland Revenue and HM Treasury.

The report, Less Taxing Tax, is a summary of responses to the O'Donnell Review of March 2004, which recommended the establishment of a new single revenue department, subsequently named HM Revenue and Customs. Building on the review, the SBS asked small and medium-sized businesses, their advisers and their representative bodies what they want from these changes and how they would like to see them implemented.

Small businesses generally welcomed the changes announced in the O’Donnell Review and the key findings of the report fall into four broad categories:

1. Support for small business

Small businesses would like the new department, together with HM Treasury, to focus more closely on their needs. Examples include:

• One point of contact - a named person who can provide help and advice across all areas of tax.
  
• A partnership approach - a new, positive relationship based on mutual trust.
  
• Better advice - long-term, proactive support that emphasises education as well as enforcement.

2. Reducing the burden on small business

Many respondents felt that the burden of administration was disproportionately high for small businesses. Suggested solutions included:

• Fewer, simpler forms - HM Revenue and Customs has to work harder to make administration easier.
  
• Coordinated inspections - with a merged department, businesses would like inspections consolidated, so that less time is spent preparing for them.
  
• Improved tax collection and operation of benefits and credits - simpler collection processes, with consideration given to having a single account for payments and repayments.

3. Better information use

The potential for using technology to improve the service offered by HM Revenue and Customs is widely appreciated, especially to produce:

• Centralised information storage - systems need to talk to each other to reduce requests for information that’s already on file.
  
• Better communication - from e-mail to secure messaging and CD-Roms, business is enthusiastic about any way of simplifying communication.
  
• More 'usable' websites - the new department's websites need to be thoroughly tested to ensure ease of use.

4. Developing better regulation and policy

Small businesses often feel that their voice is not heard in policymaking. They are looking for:

• A simplified system - to make compliance cheaper and easier and to reduce costs.
  
• A less adversarial approach to enforcement - to ensure fair treatment and aid compliance.
  
• More consultation on policy - the new department, together with HM Treasury, needs to work harder to understand small businesses and ensure they are properly consulted on proposed policy changes.

The SBS has said that it will work with Government partners to recognise that:

• Small businesses have unique needs in relation to the taxation system;
  
• The O'Donnell Review gives a real opportunity to help deliver improvements that meet these needs; and
  
• Successful change is most likely to be achieved if the views of small businesses are sought and considered during the establishment of HM Revenue and Customs.