Small firms urge government to focus on tax reform
Small businesses have urged the government to reform the tax system so it is easier to ensure compliance.
According to the Federation of Small Businesses, the average owner of a small company spends £5,000 annually, as well as three working weeks a year, on compliance.
This limits their ability to focus on other aspects of the business, with nearly half of owners revealing they struggle to know which tax rate they are meant to pay.
The average firm spends 95 hours yearly on Employer National Insurance Contributions, Value Added Tax and Pay As You Earn.
Of more than 1,000 businesses quizzed for the study, nearly half voiced concerns over the fact managing business rates had curtailed potential business expansion.
A similar number felt that corporation tax had also hindered their ability to grow, while one in seven felt the same way about their VAT contributions.
FSB National Chairman Mike Cherry has called for the tax system to be simplified so that the number of time spent on administration can be reduced.
''Time and money spent by small businesses on navigating the tax system is time and money not spent on innovating, expanding and creating jobs,'' he added.
He also described compliance as a ''huge drain on national productivity'' given the amount of time that is required.
Making Tax Digital represents one course of government action but concerns remain that businesses have not received enough support regarding the changes.
Meanwhile the FSB research found that the majority of businesses are unaware of tax relief schemes that could support them.
For businesses experiencing VAT and PAYE arrears, or unpaid tax, a range of services are available to ensure compliance, especially if they are faced with difficult financial issues.
The key is not to ignore any issues as there will ultimately be more options available when you act at an early stage.
By Phil Smith