The idea
The tax law on deductible expenses under Schedule D Case I should be based on the general principle that tax should follow the accounts, whether this is replacing capital allowances with the accounts depreciation charge or giving tax relief to all business expenses.
Why is it important?
It is almost impossible for any business to comply fully with the present tax law on business expenditure as this has the uncommercial presumption (irrespective of materiality) that the tax agent will review every item of expenditure and every invoice to ensure it is on revenue account, is not precluded from deduction by various statutory and case law rules and is incurred for the purposes of the trade.
We are wasting the working lives of many talented people in requiring every business to have undertaken pointless detailed tax compliance work on whether all its expenses are deducible or not.
If the tax law is recast so that tax follows the accounts on depreciation and other business expenses, then HMRC will be able to check compliance very easily, allowing HMRC Inspectors to focus on tax avoidance and evasion.