An overly complicated tax system is holding the UK back

Adam Frais, head of tax at BDO, argues that the UK's tax system is far too complicated and needs to be simplified. He likens the system to a "Byzantine, Kafkaesque, labyrinthine" nightmare that causes significant stress and economic harm. The 23,000-page tax code not only raises anxiety but also absorbs business time, imposes high compliance costs, weakens certainty and creates investment, hiring and expansion distortions.

The financial burden is substantial, with businesses spending over £15 billion annually on compliance and the government spending more on administration.

Frais believes that the government should treat tax simplification as a core part of its growth agenda, rather than an afterthought. He proposes three main areas for reform: corporation tax, VAT and incentives for start-ups and scale-ups. For corporation tax, he suggests replacing the current marginal rates and allowances with a simple, single rate of 21 percent.

This would reduce uncertainty and compliance burdens, encouraging investment and benefiting small businesses. VAT could also be improved by introducing a tapered registration threshold and making payments automatic at customer point of sale, reducing errors and underpayment risk.

Finally, Frais recommends reforming the Enterprise Investment Scheme (EIS) to support start-up and scale-up growth. Increasing the annual cash subscription limit and extending the scheme to include scale-ups would prevent companies from losing investment as they grow beyond current thresholds. Taken together, these measures aim to alleviate the pressure on businesses, allowing them to focus on their core strengths: investing, innovating and growing.