Small businesses don’t see UK tax system as level playing field, BCC
Business believes that the UK tax system is fundamentally unfair and want more support to stay compliant, according to new research released by the British Chambers of Commerce (BCC).
The BCC's survey of over 1,000 firms from across the UK, found that nearly three-fifths (58 per cent) of respondents think that the UK tax regime is unfair to businesses like theirs.
The findings largely signal concerns over how HMRC applies the tax rules to different types of firms, with two-thirds (67 per cent) of respondents admitting they don't believe that HMRC is fair. Micro firms are more likely to have that view (70 per cent) compared with their medium and large counterparts (59 per cent), BCC revealed.
Sixty-four per cent of companies disagree that HMRC applies tax rules fairly regardless of where the company is domiciled. Again, there is a difference in perception among small and larger firms (67 per cent micro firms versus 59 per cent medium and large).
BCC's results also found concerns over the quality of service provided by HMRC. One in two (49 per cent) firms don’t believe HMRC provides the support they need to be compliant. Many respondents also expressed frustration that HMRC underestimated the time and money their small businesses spent trying to keep pace with regulatory burdens and the complexities of the system.
Suren Thiru, head of economics at BCC, said that the results reflect a strong impression among businesses that the current UK tax regime isn’t a level playing field.
"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. In contrast, action to tackle persistent compliance issues among a small minority of firms remains frustratingly slow.
"There is also widespread disappointment over the escalating burden of up-front taxes and costs of doing business in the UK, particularly at this time of heightened uncertainty. This has proved to be tipping point for many smaller firms who typically operate on a tight cash flow," Mr Thiru said.
He added that the 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. More also needs to be done to address the escalating burden of upfront costs and taxes to provide firms with much-needed headroom to get on and invest, train their staff, and compete on the global stage," Mr Thiru concluded.