Guidance supplied to newly registered businesses trying to meet their tax obligations is too difficult to understand, according to a review committee.
The House of Commons committee on public accounts (PAC) has revealed that of the 700,000 new businesses beginning operations every year, less than 70 per cent manage to submit their tax returns on time, with the required guidance unduly complicated.
While Canadian and Australian authorities provide new businesses with single registration for all applicable taxes, HM revenue and customs (HMRC) require UK start-ups to register separately for each tax.
Exacerbating the problem is the linguistic complexity of the guidance provided for meeting tax obligations.
The 53rd PAC report explains: "The department's guidance requires an average reading age of at least 16 or 17 years to understand it, but over five million adults have literacy skills well below this level."
It recommends HMRC "make its guidance easier to understand by using plain English and improving the layout".
Though online registration has been available since 2004 for VAT, only 20 per cent of registrations have been completed online, while just a quarter of PAYE tax registrations have been submitted online since paperless registration was introduced in 2006.
The PAC report also criticised HMRC practice on the grounds of providing a bewildering amount of helplines and supplying insufficient guidance to new businesses looking to complete tax obligations.
An HMRC spokesman was not immediately available to comment on the PAC recommendations.
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