CIMA calls for cuts to fiscal calendar

Friday 24 March 2017

The UK financial climate is in a state of constant change at the moment as businesses and sole traders work to deal with new regulations. 

A recent survey from the Chartered Institute of Management Accountants (CIMA) found that 41 per cent of members said long term plans within their organisations have been affected by changes to economic, tax and regulation policy. 

CIMA wants the chancellor to introduce more cuts to the fiscal calendar and reduce the number of budget statements. Research from Martin Wheatcroft, former chief accountant at the National Grid, showed that roughly half of the 1,453 changes in tax policy over the last 45 years were introduced between 2010 and 2016. 

Up to 263 changes were made in the last two years, outlining the complicated fiscal landscape for UK companies.

Some 46 per cent of UK finance professionals said the ambiguity of upcoming fiscal events leads to more uncertainty to their companies than Brexit. What’s more, 67 per cent of CIMA members want to see less frequent alterations to regulations, subsidies and taxes.

CIMA believes continual micro adjustments in tax policy are “not overly financially effective”, with each change costing the public purse an average of £0.3 billion a year in the five financial years coming after the announcement. 

The group suggests that the benefits of the current system of fiscal planning and strategy are “negligible”, adding that the government’s five-year forecasts are inaccurate and overambitious. 

CIMA recommends aiming for fewer and more significant tax policy changes, as this could reduce the burden on businesses and individuals, providing increased stability in the long run. 

It wants to see just two budget statements annually: a five-year spending review and budget alongside a mid-Parliament review. CIMA believes this approach would focus more on outcomes, enabling ministers to focus more on delivery. 

Martin Wheatcroft, chartered accountant and author of Simply UK Government Finances 2016/17, said: “The reform that CIMA proposes would not only benefit businesses by reducing costs in the short-term and by supporting their ability to plan for long-term growth, but it would also help government to manage the public finances more effectively.”

Mr Wheatcroft went on to say that everyone would benefit from a more stable tax system, including the government. 

For freelancers, the admin that comes with being self-employed can be quite daunting, but there are excellent umbrella companies available that can help to reduce this work and allow professionals to focus solely on their projects. 

By Victoria McDonnell

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