Government publishes plans to 'modernise and simplify' the UK tax system

The Treasury has published various reports and consultations as part of efforts to reform the tax system as well as tackling non-compliance.

The documents were released on 30 November, the so-called 'Tax Administration and Maintenance Day' (TAMD), a single day for the government to share updates on announcements in the Autumn Budget and Spending Review, summaries of responses to recently closed consultations and technical information notices.

Among the documents of interest to small businesses are:

Research and development (R&D) tax reliefs

Chancellor Rishi Sunak announced in the Autumn Budget on 27 October that the government will expand R&D relief to include data and cloud computing costs. The TAMD announcements included a report outlining more details and a summary of responses to a consultation on R&D tax relief.

The report said the change "will ensure the reliefs better incentivise cutting edge R&D methods which rely on vast quantities of data that are analysed and processed via the cloud".

The following new categories of expenditure will qualify for R&D tax relief:

• licence payments for datasets.

• cloud computing costs that can be attributed to computation, data processing and software.

To prevent abuse and improve compliance, the government says all future claims for R&D reliefs will have to be made digitally.

The government will publish draft legislation in the summer of 2022 and put it out for consultation. The changes are due to take effect in April 2023.

Income tax self assessment registration for the self-employed and landlords

The government has started a consultation on proposals to bring forward the time new self-employed people and landlords register for income tax self assessment.

Currently, a taxpayer has to notify HM Revenue & Customs (HMRC) by 5 October after the tax year during which they become liable for income tax.

The government says it is exploring whether bringing the date forward " will help support taxpayers to develop good tax habits early, ultimately creating a better taxpayer experience".

The consultation document acknowledges that many taxpayers are not aware of or confused by the need to register and notify liability for income tax. It also says the current system can credit administrative burdens for both taxpayers and HMRC. The Institute of Chartered Accountants in England & Wales (ICAEW) has previously criticised the current processes for registering and deregistering for self assessment as "outdated" because they often rely "on very old forms rather than a well-designed digital service".

One of the suggestions is that registration happens when the income source starts or it exceeds a threshold. ICAEW said: "this aspect is likely to be the most controversial".

The consultation runs until 11.45pm on 22 February 2022. You can respond by emailing itsaregistrationconsultation@hmrc.gov.uk.

Small brewers' relief

The Autumn Budget 2021 included the announcement of a new small brewers' relief for cidermakers and other producers of lower ABV drinks. The government says it "will enable small breweries to expand without losing tax relief and addresses concerns raised by stakeholders that the current scheme fails to incentivise growth".

The TAMD announcements included the government's response to a technical consultation earlier this year.