Small firms 'willing to pay for less red tape'

Small firms are frustrated with the UK’s ‘hugely complex tax system’ to such a degree that they are willing to pay for it to be simplified, according to new research.
 
A poll carried out the Forum of Private Business (FPB) discovered that 57% of business owners would accept higher levies in exchange for a less complicated system, providing it led to greater rewards. And 45% of respondents said they would tolerate a larger tax bill if it was accompanied by a reduction in legislative red tape.

The trade body questioned members of its tax and budget panel and found that exactly 50% would be prepared to pay more tax under a simplified system if it were to ramp up the battle against avoidance by bigger businesses with the resources to abuse geographic discrepancies such low value consignment relief.

The findings come as the Office for Tax Simplification works on proposals ahead of the Budget on 23 March.

FPB chief executive Phil Orford said, ‘The cost of complying with Britain's hugely complex tax system is such that, if simplification and profitability result, most businesses believe a little more tax would be a price worth paying.

‘Clearly, if the Government is serious about stimulating small business growth, streamlining tax administration must be a priority. We desperately need reforms that incentivise growth by freeing up time and money to invest in planning and expansion, rather than [having] a system that impedes it, as the present one does.’

Mr Orford also addressed worries about avoidance: ‘Small businesses are deeply concerned that the system favours large companies. Plans to clamp down on tax avoidance, for example, fall short in several areas. How can the Government continue to allow major retailers to set up shop in the Channel Islands to deliberately undercut small shops and internet businesses by exploiting a VAT loophole?’

In response to its new findings, the FPB said it intends to investigate the possibility of a radical overhaul to the tax system, which the organisation believes could include the abolition of business tax reliefs and allowances, if corporation tax were cut to internationally-competitive rates and employment taxes – particularly employers' National Insurance contributions – were significantly reduced or even axed.

Categories: News , Forum of Private Business , FPB , Office of Tax Simplification , OTS , Phil Orford , red tape , Admin