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Tax obligations for newly registered businesses

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Summary

This NAO report examines opportunities for Her Majesty’s Revenue & Customs (HMRC) to improve on the help they offer to new businesses.

Around 700,000 new businesses start up each year, all required to register with HMRC for various liable taxes. For example, if a business takes on employees, they will need to pay PAYE and if the business has a turnover exceeding £61,000, they then become liable for VAT.

The study assessed the current assistance offered, by looking at three areas:

  • The compliance record of newly registered businesses
  • The process of registering for a tax
  • The guidance and advice provided by the Department.

Law-Making Explained

This is a House of Commons Paper (HC 98): it is a report from the National Audit Office (NAO).

Find out more about House of Commons Papers.

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How does it affect me?

The report makes a number of recommendations, including:

  • HMRC should target those entirely new to business who have least understanding of their tax obligations
  • HMRC should make tax registration easier to understand, e.g. by introducing online tax registration and a one-stop telephone information system
  • HMRC should work more closely with other organisations such as tax agents and financial institutions, with new businesses encouraged to use Business Link,

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