The Office for Tax Simplification has confirmed it is reviewing the benefits, costs and implications of moving the UK’s tax year end from 5 April. While the review will focus on a move to 31 March, it will also consider 31 December.
In a review scoping document, the Office for Tax Simplification (OTS) has confirmed that it will publish a report this summer (2021) exploring the implications of moving the UK’s tax year end.
While the OTS describes the review as a “high-level” exploration and analysis of the issues, it commits to examining the financial and administrative burdens for taxpayers, employers and businesses, as well as the practical considerations for HMRC systems and the potential impact on the tax gap.
The document confirms that the key focus of the review will be moving the year end to 31 March, the closest month and quarter end, which would align it with the UK financial year end.
However, the OTS also pledges to outline the “main additional broader issues, costs and benefits” of moving the tax year end to 31 December, which would align the UK with many major economies including France, Germany, the US and Ireland, which moved its year end from 5 April to 31 December in 2002.
The review will consider “relevant international experience”, according to the scoping document.
The OTS review has been welcomed by ICAEW’s Tax Faculty which suggested in February that the post-COVID recovery was a good time to consider the benefits of moving away from the 5 April date, which is a legacy from many hundreds of years ago.
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