For the past decade, pledges have been made to simplify tax and yet it is generally agreed that the taxation system has become a bloated and unruly beast that only the smartest of advisors have the talent to tame (for a price).

So the launch of the Office for Tax Simplification by chancellor George Osborne has been widely welcomed by all parties, including advisors. A less meaty tax code, which is currently 11,000 pages long, has long been the war cry of every small business owner. Finally, they appear to have been heard as the focus of the first review to be undertaken by OTS will be on tax simplification for SMEs. Areas to be looked at include:

•    build consensus among small businesses, tax professionals and academics
•    take into account current and emerging trends amongst small businesses
•    consider all HMRC taxes and duties that impact on small businesses, including the administrative burdens imposed
•    take into account Government objectives for labour market flexibility.

If there is a negative side to the proposed reforms, it’s that what is given with hand is taken by the other. The body for sole traders and the self-employed, the Freelancer & Contractor Services Association, has already registered its concern. Stuart Davis, its chairman, says: ‘The FCSA hopes that the OTS is not just government window dressing or an excuse to remove important tax reliefs, but is independent of Treasury and will have real teeth in simplifying tax for the different labour markets in the UK.’

Tax changes inevitably create winners and losers. The danger is that the OTS is another quango that will discuss and review but delivers the opposite of what is promised, or nothing at all, much like the ill-fated Tax Reform Commission. Ultimately, the reality check is the economy and if the savage cuts announced in the emergency budget fail, it’s hard to see small business owners getting a reprieve, despite the government’s pledge of an enterprise-led recovery.

So hopefully this is not an exercise in doublespeak. After all, Osborne did recently announce a £1 billion fund for enterprise, which actually meant a £700 million cut for businesses across the country that need help and support.

SmallBusiness.co.uk Blogs