Reform taxation of 2m firms, says OTS The Treasury should also simplify the way that small firms have to account for common expenses, with claims for use of home, mileage, capital items, telephones, mobiles and the internet, laundry and postage and stationery all identified as causing unnecessary headaches. The OTS has also reviewed the way that HM Revenue & Customs deals with small businesses and concluded it should become more responsive, setting up a dedicated help line, writing less threatening letters and responding to emails. Accountants said the measures were "sensible" but could go further. Patrick Harrison, a tax partner at PKF, said: "I would like to see the OTS be much bolder on thresholds. Setting the turnover threshold for small businesses that would benefit from their proposals at just £30,000 seems half hearted. To make a real difference to business growth in the UK, all businesses with a turnover below the £73,000 VAT registration limit should benefit from these simplifications. Having two thresholds seems unnecessarily complex in itself. John Walker, national chairman of the Federation of Small Businesses, said reform - including a potential flat rate of tax based on turnover - was needed as small firms found tax too complicated. A survey of its members found that 50pc spent "between two and eight hours understanding, calculating and completing tax returns." "Small firms find dealing with the tax system onerous and so we urge the Chancellor to take forward the recommendation to look at how a "turnover tax" would work for the smallest of businesses in the Budget," he said.