In a letter to the UK’s chancellor, Jeremy Hunt, ICAEW has recommended the introduction of incentives to support sustainable business growth and long-term funding streams for local councils, as well as tax simplification and action to improve HMRC service standards.
Ahead of the Autumn Statement on 22 November, ICAEW has outlined a series of actions that the government should prioritise to increase productivity and investment, ensure the sustainability of public finances, and create a tax system that is fit for the future.
In the letter to the chancellor, ICAEW’s chief executive, Michael Izza, argued: “Our tax system currently inhibits job creation and economic activity because complicated cliff edges on rates, thresholds and allowances act as growth blockers. Businesses are being stifled and tax revenues restricted due to poor HMRC service standards.”
Izza calls on HMRC to be held to account when it misses targets, while acknowledging that the organisation will only be able to administer the UK tax system effectively if it is resourced and organised appropriately.
ICAEW also suggested creating a new version of the Growth Voucher Scheme, which helped 28,000 small businesses access advice before it closed in 2015.
“Too often, the blockage to accessing finance is not the quality of the business, but the quality of the application,” explained Izza. “Such investment is essential in tackling the UK’s productivity slump and should be treated as a priority.”
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The letter also urges the government to re-establish its green credentials and provide certainty to businesses wanting to make investments in sustainable technologies. Alongside reviewing current R&D incentives, with special support for SMEs, ICAEW suggests a net zero investment strategy combining incentives, regulation and spending targeted to relevant sectors.
Izza added: “A clear strategy is needed to increase the resilience of the UK economy, underpinned by certainty, clarity, stability and the right long-term incentives to influence investment, employment and growth.”
In the letter, ICAEW further suggested that the government must also tackle the crisis in local authority financial reporting and audit.
“The structural failures in the local audit system, with nearly a thousand delayed audits, may have serious financial consequences for communities across England,” said Izza.
“We hope the chancellor will use the Autumn Statement as an opportunity to increase the resilience and sustainability of the public finances, with a cross-government effort to clear the mountain of delayed audit opinions to get the system back on track.”