ACCA calls for UK tax review ahead of budget

The Association of Chartered Certified Accountants (ACCA) has called on UK Chancellor John Healey to avoid raising taxes or introducing extra compliance obligations as he prepares to deliver his budget next month.

The appeal comes after HM Revenue and Customs (HMRC) indicated a provisional UK tax gap for the 2024–25 tax year of £59.2bn, with corporation tax accounting for a 35% share.

In response, the ACCA is calling for an immediate investigation into the underlying causes of this deficit, alongside a comprehensive review of the UK tax framework to identify key causes of the corporation tax shortfall and simplify the system to benefit struggling enterprises.

According to the organisation, excessive complexity within the current tax regime acts as a drag on economic expansion.

The body, which represents more than 100,000 UK professionals, recommends implementing a long-term simplification strategy designed to reduce taxpayer errors, lift government receipts and lower administrative overheads for businesses.

The recommendations coincide with findings from the ACCA’s pre-budget member poll, which recorded a sharp deterioration in economic sentiment.

Almost two-thirds of respondents (65%) held a pessimistic view of the economy, while only 4% expressed optimism – down from 29% in 2023.

This drop in business confidence has been reinforced by rising administrative demands. Nearly three-quarters of members (73%) reported an increase in regulatory requirements over the past 12 months, compared with 2% who observed a reduction.

Survey respondents singled out Making Tax Digital as the most detrimental administrative imposition delivering minimal benefit to end users or consumers, cited by 30% of participants.

Discontent with HMRC service standards declined from peak levels in August 2024, when 89% of respondents reported a detrimental impact on organisational productivity and efficiency, dropping to 54% by August 2026.

ACCA UK Technical and Strategic Engagement head Glenn Collins said: “Our members are clear: a cocktail of spiralling costs, economic uncertainty and red tape has stalled growth and stagnated economic confidence. The complexity of the UK’s tax system is holding back investment and economic growth. 

“We believe it is crucial to better understand what drives confusion and problems with our tax system to identify the areas of biggest loss and the opportunities for reform or better education, especially around Corporation Tax.

“The government must focus their efforts on generating the right conditions for growth: provide a long-term plan for and start identifying ways to simplify the tax system to enable businesses to plan and invest to generate growth.”