Tax rules unfair, say two-thirds of businesses

Small businesses in the UK are becoming increasingly frustrated at an unfair tax system, according to new research.

Following studies from the British Chamber of Commerce, it was discovered that over two-thirds of small businesses believe that HMRC implements the current tax rules in an unfair manner.

The research, which saw the BCC contact 1,000 firms, highlighted that SMEs feel that bigger businesses have an easier ride when it comes to taxation.

“When it comes to compliance, there is a tendency for HMRC to see smaller businesses as low-hanging fruit and as a consequence they feel under the constant threat of being called out for getting things wrong in a tax system that has grown ever more complex,” according to Suren Thiru, Head of Economics at the BCC.

While 67% disagreed that the current rules were fair regardless of business size, that number increased among the ‘micro’ businesses surveyed. The research suggests that generally, the smaller the business, the more they feel put out by the current system.

According to the BCC report “The relentless rise in upfront business taxes and costs, from sky-high business rates, to the costly introduction of Making Tax Digital and changes to auto-enrolment, is adding to the already onerous cost and administrative burden on firms and is reinforcing the concerns over the current tax regime.”

Small Businesses and Tax Rules
What is also concerning small businesses is the lack of guidance on matters from HMRC. Nearly half of all firms surveyed (49%) believe that HMRC need to provide more support to ensure businesses can be compliant.

The study cited a lack of foresight as to the length of time and amount of money needed for small businesses to get their tax affairs in order, as a primary concern for businesses.

Changes are afoot in the tax system all the time, with the recent adoption of the ‘Making Tax Digital’ scheme the newest requirements for organisations to follow.

And following the latest research, the BCC are calling for the government to step-up and help small businesses adhere to the law; “HMRC must step up efforts to provide better support to smaller businesses to get their tax right, rather than simply pursuing and enforcing penalties. This should include matching investment in frontline HMRC help towards SMEs, with their work on non-compliance and tax evasion.”