- Foxmain Associates
Businesses support changing the tax year date
A poll has found that 91% of medium sized firms support simplifying the tax system by changing the end of the tax year to 31 December.
The survey, conducted by international accounting firm BDO, found that businesses overwhelmingly believe that the time is right to align the tax date with the end of the calendar year.
The Office of Tax Simplification is reportedly mulling the proposal which would bring the UK system in line with the rest of the global community.
Paul Falvey, Tax Partner at BDO, commented on the findings, saying "Clearly there will be challenges associated with implementing this change, not least for the Government itself. But in the long term, a 31 December year-end would also make life simpler for HMRC."
"Aligning the year-end with more of the international community will help taxpayers to calculate and HMRC to check that the correct amount of tax is paid by those doing business in more than one country," he added.
Until 1752 the UK tax year started on 25 March, which was formally the date of New Year's Day. The date jumped forward when Britain changed to the Gregorian calendar and in 1800 the Treasury decided the tax year would end on the 5 April each year.
The Institute of Chartered Accountants in England and Wales (ICAEW) broadly concurred with BDO's findings.
Anita Montieth, a Technical Lead and Senior Policy Adviser for ICAEW said: "When we've asked our members for their views, there was an overwhelming preference for a move away from 5 April. Members with international connections would like the tax year-end to mover to 31 December"
Nonetheless, Montieth noted that "businesses will need time to prepare and implement changes properly" to minimise the possibility of disruption.
The UK is virtually alone in ending its tax year on 5 April. Whilst Ireland previously shared the same tax year dates it changed them after joining the Euro in 2002.