This week's opinion

HMRC’s latest independent research report Sources of Company Income has been published. It commissioned this research into businesses with fewer than four employees to ‘help it better understand how they work with clients how they derive their income and what they do with it’. Readers often say that HMRC does not understand small businesses so such surveys should be useful. I say ‘should be’ because unfortunately I have found this report confusing and I am not sure that any sensible conclusions can be drawn from it. For example consider this question and the analysis of responses.

Q Would you be able to estimate the percentage of the company’s profits that was drawn by director shareholders from the company in the last financial year?

A This varies for different types of business. Smaller businesses tended to have had a lower proportion of their profit go...