The Institute of Chartered Accountants of Scotland (ICAS) has confirmed its in-principle support for modernising the UK tax system, while urging the government to ensure reforms do not create excessive compliance burdens for businesses or their advisers.
The professional body made the observation as ICAS OMB & Practice (Employment & VAT) head of tax Gordon Grant shared the institute’s response to two separate consultations.
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The two government initiatives are an HMRC consultation on reporting company payments to participators and a joint call for evidence on business systems integration run by HMRC and the Department for Business and Trade.
The systems integration review explored whether connecting commercial software platforms such as accounting packages, banking portals, e-commerce tools and point-of-sale systems could help businesses maintain records more accurately and efficiently.
ICAS noted that linked software ought to reduce administrative workloads and raise data quality.
However, it questioned whether the associated costs are consistently justified for smaller enterprises, warning policymakers against assuming that greater digital integration automatically delivers efficiency gains.
The institute also cited cases where software upgrades were pushed through during critical periods, forcing businesses and advisers to implement new systems mid-year, often at additional cost.
Further, ICAS flagged integration failures that went undetected until accountants reviewed the output.
In some cases, disputes arose between software suppliers, each blaming the other, while taxpayers were left to deal with the consequences.
The second consultation focused on HMRC proposals for enhanced reporting on transactions between close companies and their participators.
This initiative reflects ongoing government scrutiny of the small business tax gap and the compliance risks tied to owner-managed businesses.
In its feedback, ICAS observed that directors receiving professional counsel generally have a good grasp of their statutory duties, whereas companies operating without external advice often lack this understanding.
The institute also raised concerns that the growing availability of AI tools could lead more companies to forgo professional guidance, potentially increasing the risk of misunderstandings and reporting errors.
While many advised businesses already compile the information HMRC wants, ICAS noted that the practical impact of new rules will depend heavily on the sophistication of a company’s existing systems.
The body warned that mandatory, detailed reporting on trusts, inheritance tax transfers of value, corporate participators and complex group arrangements could introduce substantial administrative strain.
Across both submissions, ICAS reaffirmed its backing for higher data standards, upgraded digital systems and practical measures aimed at cutting error rates within the UK tax framework.
