Businesses think UK tax system is ‘unfair’

George Hay Chartered Accountants

A survey of over 1,000 businesses, conducted by the British Chambers of Commerce, has revealed that many feel the UK tax system is fundamentally unfair and disproportionately penalises them.[1]

More than two-thirds of respondents are concerned that HM Revenue & Customs (HMRC) does not apply tax rules fairly across all sizes of business.

Micro-firms are those most likely to feel that they have been unfairly treated, with approximately 70 per cent purporting to share this view, dropping to 59 per cent for medium and large-sized firms.

Furthermore, businesses are also concerned about the quality of service that they receive from HMRC.

Just under half of the firms that were surveyed reported feeling that HMRC does not provide the support that they need to achieve compliance.

Many expressed frustration, in response to a failure on HMRC’s part to recognise just how much time and money was being spent on keeping up with regulatory changes and understanding the complexities of the system.

Again, perception differs depending upon the size of the business; 51 per cent of micro-firms reported a lack of support, compared with 42 per cent of medium and larger firms.

Suren Thiru, head of economics at the British Chambers of Commerce, said: “These results reflect a strong impression among businesses that the current UK tax regime isn’t a level playing field.

“HMRC must step up efforts to provide better support to smaller businesses to get their tax right, rather than simply pursuing and enforcing penalties.”

The BCC is now calling on the government to improve the service that HMRC provides to businesses, by matching the investment in tax avoidance work with funding for support and advice to businesses, reducing the compliance burden and improving the processes for collecting tax.

It has also repeated its call for the government to refrain from introducing new input taxes, or other significant costs, for the remainder of this parliament.

In response, an HMRC spokesperson said: “We want to help customers who need support to get their tax affairs right, while bearing down on the small minority who try to break the rules.”

Martin Williams, Partner at George Hay, said: “Increasing upfront taxes and costs, from business rates to the introduction of Making Tax Digital, are simply intensifying the onerous financial and administrative burden that many firms know only too well already, particularly those who operate on a tight cashflow.”

“When it comes to compliance, there is too often a tendency for HMRC to see smaller businesses as potentially ‘easier’ targets and so these firms spend valuable time worrying about what they may or may not be doing wrong”.

“As well as stepping up its efforts to help smaller businesses to get their tax right and investing more in its frontline, HMRC should also be doing more to simplify complexities within the system and address escalating costs with a view to giving businesses the freedom they need to invest and compete with their international counterparts.”

Here at George Hay, we understand the challenges faced by businesses as a result of the economy, regulatory changes and the UK tax system more generally. We also know that, whilst compliance is a key concern for you, strategic advice, direction and support is equally important.

We can help you to navigate the complexities associated with running a business, to plan ahead, to keep pace with new legislation, to adapt to the changing economic climate and to make good business decisions, whilst ensuring that you are always compliant.

Our team have years of experience in advising businesses of all sizes, from small owner-managed companies and start-ups to large blue-chip companies. So, if you’d like to discuss your circumstances in more detail with one of our experts, contact us today on 01462 708810.