The Association of Chartered Certified Accountants (ACCA) has told the UK Government that overhauling and simplifying the tax system would be the most effective step it could take to foster entrepreneurship.
Responding to HM Treasury’s ‘Tax support for entrepreneurs’ consultation, the ACCA said that many founders and investors are discouraged from backing new ventures because of intricate tax rules, time and cost of administration, and compliance burden.
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The body said it supports the policy drive to help entrepreneurs and accepts that current incentives do provide valuable support to start-ups and growing companies.
ACCA UK Strategic Engagement lead Gemma Gathercole said: “Existing tax support can have a significant impact on available and accessible start-up and scale-up capital.
“However, we believe more needs to be done not only in removing cost and compliance complexity but in focusing existing schemes on high-priority sectors.”
Alongside simplification, the ACCA urged the government to step up communication efforts so that small business owners are better informed about the relief already available.
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By GlobalDataIt also wants to see fresh tax measures aimed at encouraging profits to be reinvested in young companies, arguing that targeted support is needed to balance the risks borne by both entrepreneurs and early-stage investors.
The ACCA also warned that tax rules around start-up incentives have become steadily more complicated.
It pointed to anti-avoidance provisions attached to the Enterprise Investment Scheme and Seed Enterprise Investment Scheme, which it says have driven up advisory fees and made it harder for businesses and investors to secure relief.
The organisation suggested that regulated advisers, which must adhere to strict ethical standards, could act as “gatekeepers” to limit abuse of reliefs.
In its view, this approach could allow for simpler rules while still protecting the system, reducing both complexity and compliance costs.
The ACCA added that a more streamlined regime would ease the demands placed on HM Revenue & Customs and could help improve the tax authority’s responsiveness.
It also backed greater digitalisation of schemes to cut paperwork and reduce administrative strain on businesses.
