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Private companies only file one group tax return, but no individual company returns, no accounts and no tax computations

Comment 2nd July 2010

In the USA (the land of the free) a group of say 250 private companies only has to file one group consolidated tax return ie one document. No tax computations and no accounts.

In the UK such a group would file 250 individual tax returns, 250 individual tax computations and also file 250 individual set sof company accounts twice (once with Companies House and once with HMRC). So the UK Group of 250 companies files 1,000 documents compared to one in the USA!

The USA business environment and tax collection function very effectively with their requirements. All the extra filing in the UK does is create unneccsary paperwork.

In addition, on each of the three documents for each company now filed with the HMRC (tax return, tax computation and accounts), HMRC is now requiring that companies purchase special software (various different kinds – not supplied by HMRC) to electronically tag each cell to file each document electronically under the IXBRL system. Electronically tagging just one set of accounts takes a trained person two days.

One can immediately see why the USA is more successful commercially.

Tens of thousands of the accounts that have to be filed at Companies House are for dormant companies that are not even trading. Even accounts for dormant trustees limited by guarantee (which have no actual figures in them) for residential management trusts have to file accounts with draconian penalties if they miss deadlines even by a day.

So scrap all filings of tax returns, tax computations and accounts for individual companies for each group of companies or for an individual company bnot part of a group, make it so  they file only one tax group tax return and no tax computation or accounts. 

 

Why does this matter?

Putting UK private company tax return filing (with no filing of tax computations or accounts) on the lines of the USA would save massive amounts of administrative time both at the companies themselves and in the public sector bodies which file and process all the data they receive. All the extra UK administration is a massive waste of resource which produces nothing.

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