What is clear beyond doubt is that the UK tax system is among the most complex in the world.

It is a deterrent to businesses looking to move into Europe and a nightmare for those that have to understand and interpret it.

Legislation by cross reference and arcane English are just two of the issues that have added to the problem.

The fact that there are no deliberate gaps in our legislation where new law on the same subject can be added has made matters worse. Law covering the same area could be scattered across different Finance Acts.

There has been much said in the press recently about Francis Maude's plans to cut the redundancy protection of civil servants including all of Whitehall, large regional departments such as Works and Pensions, Revenue and Customs, the Ministry of Defence and the Ministry of Justice.

Some long serving members of these departments would be entitled to six years redundancy pay if they were made redundant.
Credit due to them, the previous Government tried to halt this particular gravy train and were defeated in court, hence the need for legislation.
There is much talk about the current economic crisis forcing Government to look closely at spending, including pay, pensions, and now redundancy protection for the public sector, as well as social security benefits and capital projects.
The question we must ask is why it has taken a financial crisis of such magnitude to make Government look in depth at the situation?

Now that the initial dust has settled on the budget there is time for some reflection on the measures introduced.
Much has already been said about the increase in VAT and the lower than expected CGT rate but tucked away in the press releases is a little gem that has been largely overlooked.

Government is going to end the effective requirement to use a pension fund to buy an annuity by age 75.

Anyone listening to this year's Budget could be forgiven for thinking that only wealthy people will be paying increased taxes to rebalance the Budget.

There was much vaunting of the high rates of tax and the reductions in relief to be suffered by the 'better off'.
Darling mentioned the 1p increase in NIC and the fact that it would not affect anybody earning less than £20,000. What he did not say, was that the 1% increase is on both employers and employees, making an effective 2% increase to fill the coffers.

Everyone focuses on the 31 January tax deadline for filing tax returns. Moira Stewart, sitting in the cupboard, reminded us that taxpayers could face a £100 penalty if returns are not filed on time.

A date is fast approaching, however, that could have much more serious implications for tax payers. If tax payable on 31 January 2010 is not paid by 28 February, it will carry an automatic 5% surcharge. This is more than the highest interest rate you will ever pay on your credit card bill or your bank loan.

When it comes to evaluating your cashflow, bear in mind that the above surcharge equates to a whopping 60% p.a. interest.

Bear in mind there is always an alternative. If you contact HMRC before the penalty hits and agree payment by instalments, no penalty surcharge will be added to the amount outstanding.

A word of warning however, HMRC have become aware that some advisers are advocating that the "taxman" is a cheaper way of borrowing than going to the Bank. Therefore HMRC are looking more carefully into requests for time to pay (TTP). Taxpayers must therefore be able to show that they have exhausted all other methods of paying their tax, before approaching HMRC to be considered for leniency and allowed to enter into a TTP.

It is however still a worthwhile lifeline for those facing difficulties - and as the 28 February fast approaches - the time to deal with it is NOW.

Alistair Darling in his PBR announced a new 50% payroll tax on banks and building societies paying discretionary bonuses of £25,000 or more. This new tax, which will be payable by the banks and building societies and not by the individuals is expected to raise £0.55 billion between now and 5th April 2010.

Interestingly the tax only applies to bonuses payable between 9 December and the end of the current tax year. This would imply that the Chancellor expects bonuses of £1.1 billion to be paid in that three and a half month period. Perhaps he believes there will be a lot of bonuses paid before Christmas.

There is however one word in his announcement that initially raised a question mark, and that was the word 'discretionary'. Reviewing the press releases however makes it very clear that the new tax will apply to both 'discretionary' and 'contractual' bonuses.

It looked at first sight as though the Chancellor was just trying to deter banks from paying bonuses that they are not already by law obliged to pay but it now seems clear that it is also a revenue raising measure albeit of fairly modest proportions. This appears to be a win-win situation for the Chancellor, either the banks will be discouraged from paying large discretionary bonuses or the government will increase the tax take. They will in any event gain the tax on contractual bonuses.

The benefit to the Chancellor will be further enhanced by the fact that bank payroll tax will not be taken into account when calculating the banks profit or loss for other tax purposes.

Chancellor Alistair Darling tried very hard in yesterdays pre budget report to convince the world at large that it is the very wealthy in our society who will meet the cost of the recent economic events. The real way in which the cost will be met becomes very apparent when you read the small print.

Alistair Darling announced a 0.5% increase in the rate of both employees and employers National Insurance effective from April 2011. What he did not immediately make clear was whether this was a confirmation of the increase already announced in the last budget or a further increase.

An examination of the press releases confirms however that the 0.5% increase announced today is in addition to the previous increase.

This means that from April 2011 employees and employers National Insurance will both go up by 1%. The expected take from this 1% increase is some £8.6 billion. By comparison the expected tax take form the much publicised bank payroll tax is a mere £5.5 million. Even the increased tax rate on those earning more that £150,000 per annum is only expected to raise £1.1 billion.

What this clearly demonstrates is that the only way for the country to get out of the current economic turmoil is for the entire population to pay more tax.

A major concern must of course be that this additional levy will be a strong disincentive to employers taking on new employees. Let us all hope that this proves not to be the case.

There is no doubt that employers will be looking even harder for any legitimate ways of reducing this further substantial increase in the NIC burden.

For further comments on the Pre-Budget Repor I attach a link to my firm's commentary and suggested actions
http://tiny.cc/ae9rH

The media at the moment is full of reports of MP's who are furious at Sir Thomas Legg who they claim has "changed the rules" on MP's expenses. They insist that it is unfair that they are being asked to pay back amounts which were within the rules when originally paid.

Welcome to the real world that the rest of us inhabit!

Many taxpayers have sacrificed over many years in order to put money into their pension schemes secure in the belief that they would reap the benefits in their retirement. They confidently expected that all the funds would be used at retirement to provide a tax free lump sum plus a pension taxed at their marginal rate of tax

In April 2006 Government changed the rules with retrospective effect to cap all existing pension arrangements. A pension cap of £1.5million was set and any fund value in excess of this is taxed at 55%, as well as 40% tax being due in the normal way on any pension paid from the remaining funds.

In response to suggestions by the relevant professional bodies in 2006 that the £1.5million cap would simply stay at that figure and be eroded by inflation, Government maintained strongly that this would not be the case and they even announced the increases from 2006 to 2010 to back up their assurances. The figure rose each year in stages from £1.5million in 2006 to £1.8million in 2010.

Then, of course, last year Government couldn't resist the opportunity to claw back more money in stealth taxes and so the £1.8million limit was frozen for five years between 2010 and 2015. So someone with a fund of £1.8million in 2010 earning a return of 3.0 per annum on their fund will see it rise to £2.08 million by 2015 and Government will take nearly £155,000 of that increase, in spite of the fact that inflation will have reduced the real value of their pension in that five years.

So much for being prudent and saving for your retirement! Is it any wonder that people are now wary about saving via their pension fund? What future retrospective raids will Government make on taxpayers hard earned savings.

It really is not nice to have the goalposts moved after the event and perhaps MP's will now have some personal understanding of the deep resentment and mistrust felt by the electorate who having saved for their retirement have had their pensions pots raided.

HMRC have adopted the policy for some time now of referring to tax payers as customers. I have never been quite sure why they have insisted upon this since most of us would choose not to be customers of HMRC, if we had any choice.

If we are customers then we must ask ourselves whether the customer care we receive is all it should be.

A client of my firm recently received a notice stating that their gross payment status was being withdrawn under the construction industry scheme. Anyone in the construction industry will know only too well the cash flow problems that can be caused by having gross payment status withdrawn.

The reason given for the withdrawal of gross payment status was 'that the 2008/09 P35 hadn't been received'.

Having submitted the said 'P35' by recorded delivery on 5 May, the client rang HMRC to find out what the problem was. They were informed that HMRC had indeed received the P35 in early May, but hadn't logged, or processed it, until 25 June, thus giving the impression that the P35 was late in being submitted.

At this point the client called their HMRC construction industry scheme contact to pass on the information, only to be told that they would still need to officially appeal against the withdrawal of their gross payment status.

In other words, having failed to log and process a customer's P35, another department of HMRC had then withdrawn their gross payment status because of the first HMRC department's failure! Then, to add insult to injury, the "customer" was told that they had to appeal against the notice withdrawing gross payment status, which should never have been issued in the first place!

With customer service like that, commercial businesses would not be expecting to keep their customers for very long!

Looking at the Commercial Property section of today's Birmingham Post there are two articles which are quite remarkable in the contrast they present.

First is an article by David Green entitled '106 deferments could restart stalled schemes!'

The article points out that Birmingham City Council are trying to help the development industry by deferring the requirements within Section 106 agreements where the developer can show that they cannot meet the Section 106 costs at the present time.

The other is an article written by me entitled 'New Tax burden for industry'. The article is about the recently published HMRC consultative document setting out proposals that will result in a significant additional national insurance burden on the development industry by deeming large numbers of self-employed people to receive employment income.

Efforts by Birmingham City Council to help developers deal with what, in the current downturn, have become onerous Section 106 obligations can only be regarded as constructive and helpful. It is a great pity that HMRC and Government seem hell bent on dealing another hammer blow to an industry in deep recession. They should instead be following Birmingham City Council's excellent lead.

The proposals set out in the consultative document are all the more galling because despite applying Employers Insurance to self-employed workers' earnings they do not plan to treat them as employed for any other purpose. So they will get none of the state benefits that employees get when they lose their job.

Phrases like "having their cake and eating it" come readily to mind.

No one can argue against anti-avoidance measures needed to protect the Exchequer from abuse, but these proposals will go way beyond that and catch many cases of genuine self-employment.

It is vital that the industry speaks with a common voice to ensure, if at all possible, any final legislation is targeted, more narrowly, at the real mischief it is aimed at.

We shall be sending our own response to the consultative document from RSM Bentley Jennison and if anyone would like to respond to this article, I will make sure that your comments are taken into account.