The administrative burdens

Research undertaken by KPMG for HMRC in 2006 measured the administrative burden of the tax and duty system on UK businesses. Targets for reducing this burden were announced at the Budget in March 2006.

The research showed that the level of burden of tax administration in the UK, at around 0.45 per cent GDP, compares favourably with the other countries, the Netherlands and Denmark. This is because the UK already benefits from initiatives to reduce administrative burdens such as bringing together responsibility for tax and NICs in one department, and having a high VAT threshold.

However, the research did confirm business feedback that despite this favourable comparison, tax forms and returns as well as audit and inspections remain issues for business. To reflect this, targets were set to ensure HMRC tackles both these aspects of the burden on business, by

  • Reducing the burden on businesses of dealing with HMRC's forms and returns by at least 10 per cent over five years; and
  • Reducing the burden of dealing with HMRC's audits and inspections by 10 per cent over three years and at least 15 per cent over five years;

The research also highlighted the burdens that irritated businesses the most, but did not necessarily score highly in administrative burden terms. To address these, the Budget also included an announcement that HMRC, in discussion with business, will analyse the research to identify and prioritise further areas for action.

HMRC has published the main findings and methodology from the KPMG research into administrative burdens in two volumes. The first volume provides the high level findings and methodology. The second volume provides further detail covering the 28 main tax areas that are the responsibility of HMRC. The research is just that – research. It is not a set of recommendations but is the raw material for onward analysis by HMRC.

A new Administrative Burden Advisory Board has been established, chaired by Teresa Graham, non-executive director of four businesses and Deputy Chair of the Better Regulation Commission, to work with HMRC on dealing with the complexity of the tax system.

Purpose of the Administrative Burden Advisory Board

The Advisory Board is chaired by Teresa Graham who is a non-executive director of a number of small businesses and the former Deputy Chair of the Better Regulation Commission. The Board’s purpose is to act as an external advisory group to assist HMRC as it analyses the data from the KPMG research and prioritises options for reducing the administrative burden of tax on business.

Advisory Board members are: Teresa Graham, Ian Dewar, Andrew Hubbard, Dr Martin Jones, Karen Thomson, Simon Sweetman, Roger Southam, Francesca Lagerberg, Steve Sharratt, Julie Kenny, John Whiting, Paul Aplin.

For further information see