The UK's Office of Tax Simplification (OTS) has published a package of recommendations aimed at making the tax system simpler and easier to use for "micro-businesses."

    The recommendations are targeted primarily at incorporated businesses employing less than ten people. According to OTS Chair Angela Knight, "A company with a few staff should not face the same burdens as a multinational." She said that micro-business owners "are spending too much of their time and money sorting out their tax or paying someone to do it for them."

    Among the OTS' recommendations are that filing and payment dates be aligned, and that HM Revenue and Customs (HMRC) provide extra support at weekends and evenings. It also said that the Government should seek to improve the value-added tax (VAT) Mini One Stop Shop (MOSS) system, evaluate the feasibility of establishing an advance-clearance facility for VAT, and improve awareness of the VAT flat-rate. It added that the Government should aim to better align taxable profit with accounting profit, focusing on whether many of the "sundry tax adjustments" can be eliminated.

    The OTS will develop an outline of a "Sole Enterprise Personal Assets" (SEPA) vehicle, to test its practicability. According to the report, "there is merit in a system that provides protection for personal assets for sole traders, limiting their personal liability while allowing them to continue to trade as a sole trader with the associated accounting and tax treatment."

    The OTS will also develop an outline look-through system that would target companies that do not intend to increase in size, are effective one-person businesses, distribute all (or almost all) of their profits, and have few assets or need for investment funds. The aim will be to generate debate on the feasibility of such a system.

    Knight said: "The UK has a growing number of small, incorporated businesses and helped by new technology and platforms, the trend is for people increasingly choosing to be their own boss (with more control over how they work) rather than being an employee. Many are sole traders who have chosen to incorporate to limit their liability, to enhance their credibility and to provide a more formal business structure. The tax system needs greater flexibility so that micro-businesses receive the benefits of incorporation (such as limited liability) but not the unnecessary administration burdens. This review sets out what changes can be made now and the next steps required."

    John Whiting, OTS Tax Director, added: "We have identified a range of ways the tax system can be improved for small companies – ideas for simpler administration including making sure help is a click or call away. We also believe the OTS should be formally involved in HMRC's important Making Tax Digital's development to ensure simplification issues from the user's perspective are considered at every stage."

    "We also think that there is promise in new ways of carrying on business and different ways of taxing a company. We need to do more work on these radical ideas and want to hear views on the outlines we have put forward in our report."