Timely research from the FPB – a not-for-profit small business support group - has revealed that many small firms believe the tax system favours big business and urgently needs to be simplified.

 

With the January 31 deadline for online tax returns just days away, the FPB has discovered over half its members believe Britain’s tax system puts SMEs at a disadvantage compared to large companies.

 

The research also found:

Small firms believe Britain’s tax system is deeply unfair and urgently needs to be simplified, new research has revealed.

 

A poll carried out by the Forum of Private Business (FPB) found that more than two thirds of SME owners believe the tax burden placed on them is unfair - and over half think the tax system favours big companies.

 

The research has been released just ahead of the January 31 deadline submission of self-assessment forms on the HM Revenue and Customs website.

 

It was compiled by canvassing SME owners through the FPB’s Tax and Budget Member Panel which serves as a dedicated, subject-specific opinion-taker.

 

An overwhelming 43% of respondents to the panel said ‘fairness’ should be the main priority for the tax system. The next popular priority was ‘simplicity’, which was supported by one in five smaller businesses, echoing widespread anger with a system which is among the most complex in the world.

 

Additionally, 13% said they want to see the tax system reformed to make Britain more competitive internationally.

 

And in more general terms, 45% of respondents said their tax burden was a ‘very serious’ issue for their firms.

Commenting on the findings, FPB spokesman Phil McCabe said: “Our members believe that they are bearing an unfair tax burden because of the moderate sizes of their businesses. 

“The complexity of the British tax system is not only time-consuming and frustrating, it also puts small firms at an instant disadvantage. Big companies have the expertise and resources to understand the system and minimise their tax burden. For most of our members, hiring an outside tax consultant represents a significant cost few can afford, especially in the midst of a recession.” 

Mr McCabe added: “Whichever party comes to power at the general election, we would like to see them lay the foundations of a bold new tax environment where small firms are rewarded, rather than unfairly penalised, for the huge contribution they make to the British economy.”

The Tax and Budget Member Panel also asked SME owners about the recent Pre-Budget Report (PRB). Respondents to the panel were distinctly underwhelmed by the measures announced by the Chancellor, with more than half saying that the PBR undermined both business confidence and future employment.

The increase in National Insurance Contributions proved deeply unpopular, with many FPB members expressing anger at further costs being added to employment. 

Comments submitted to the panel by small business owners included:

“Nothing is ever done to support and encourage small businesses. We are lumped in with large businesses and corporations which, for obvious reasons, are much better-placed to deal with increased taxation and employee legislation.”

“…the increase in National Insurance Contributions is another kick in the teeth for the employer. It is already very costly to employ staff and, in an environment when employers are under pressure to maintain or even reduce prices, this is just another cost to impact on the bottom line.

“It is no surprise that companies are relocating offices overseas.”