Could tax changes help SMEs to thrive?
Greater help for SMEs is required to help them export and thrive, according to a new report, and tax incentives could be the answer.
The Confederation of British Industry and accountants Grant Thornton have suggested that tax alterations could aid companies with a turnover of between £10m and £100m.
These firms represent less than 2% of all business but are responsible for 23% of economic revenue and some 16% of all jobs.
According to the report, titled ‘Stick in the Middle’, the current tax system is acting as a break on growth by disrupting cash flows and being exceptionally time-consuming.
These smaller companies do not have the same level of resources as larger ones to meet all of the tax rulings and they are lacking in government support.
It means these firms have to tackle key financial issues or face the need for possible corporate insolvency measures if the problems cannot be overcome.
This is also impacting on the ability of many firms to export according to the report, resulting in financial losses through a lack of sales.
Widening access to research and development tax relief is one measure being put forward by the report in a bid to encourage investment and innovation.
John Cridland, CBI director general, said that investing into new markets was essential for the long-term health of the economy.
“The UK’s tax system should support these entrepreneurs to do this but in many cases it is actually working against them,” he explained.
He called for an urgent review of the system to help medium-sized businesses take advantage by altering the Quarterly Installment Payments system.
The report also states that changes to transfer pricing rules could boost exports, providing an additional source of finance for many smaller businesses.
These businesses are widely linked to the wider economic recovery and additional support could go a long way to securing the futures of the companies concerned.
By Phil Smith