Tax Compliance (Hansard, 3 November 2003)

§ Lord McIntosh of Haringey

The figures quoted are from the Bath report (Vol 1, table 3.6 page 30) published by the Inland Revenue in November 1998. They reflect the cost to the employer of complying with the PAYE and national insurance responsibilities as they stood in 1995–96 when the research was undertaken. A more up-to-date numerical measure is not available, although the 2001 Review of Payroll Services by Patrick Carter gives a more recent qualitative view.

The Inland Revenue has pursued a number of initiatives to address the fact that the costs of tax compliance for small firms are disproportionately higher than those for large firms. Many of the specific recommendations in the two reports cited have been implemented or are under development. In addition the Inland Revenue now has a target to reduce the compliance costs of small businesses. Work is currently in hand on a range of measures including implementation of the electronic approach recommended by the Carter review. From 2004–05 businesses with fewer than 50 employees will receive financial incentives to help them to switch to new technology and realise benefits for their business. For the past two years small employers have benefited from a twice-yearly CD-ROM issued by the Inland Revenue. This gives ready access to the key information which the employer previously had to access in sizeable paper information packs. Small employers have commented that this cuts the cost both of accessing the information and of correcting unnecessary errors.