Bureaucracy burdens new businesses

A large number of new businesses are failing to keep on top of their national insurance and tax obligations, due to the unnecessary level of bureaucracy and complexity created by HM Revenue & Customs.

According to a new report published today by the Committee of Public Accounts, many businesses are forced to register separately for different types of tax, receiving separate reference numbers and having to contact different departments for each levy.

The report added that Government literature explaining the tax system to small-business owners was also too complex, calling on the Revenue & Customs department to work on simplifying their leaflets and information packs.

"The last thing anyone starting a new business wants to do is spend a lot of time talking to the tax man," said Edward Leigh, chairman of the Committee of Public Accounts. "But new businesses are frustrated by having to register separately with HMRC for each and every tax they have to pay. This is because the Department is hampered in having a separate computer system for each tax."

The report also called on the department to reassess its powers to fine companies that do not pay their NI and tax contributions on time. However, it added that it first needed to ensure that companies had access to the right support, to ensure they are given every chance to get their affairs in order.