SMEs losing £25b a year due to tax admin

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FSB: ‘Small businesses are fully behind the government’s vision for a high skill, high productivity, low tax economy. With costs soaring, and the Budget approaching, it’s now time to see the policies that will get us there’.

In a new report, it has been found that the government’s Making Tax Digital initiative has resulted in significantly increased costs and admin burdens for smaller sized businesses.

This is according to findings from the FSB’s (Federation of Small Businesses) recent publication ‘A Duty to Reform: Making tax work for small businesses in a digital world’, which revealed that for SMEs participating in the Making Tax Digital (MTD) programme the average cost of tax compliance is £4,562. For those yet to join, this figure is at just £2,960.

So far, seventy per cent of small businesses have made the MTD switch; among them, 71% say that the move has resulted in increased costs and time lost to learning new processes.

FSB National Chairman Mike Cherry, said, “Small businesses are fully behind the government’s vision for a high skill, high productivity, low tax economy. With costs soaring, and the Budget approaching, it’s now time to see the policies that will get us there.

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“Reducing the huge amount of time and money lost to tax bureaucracy would free up billions for investment, upskilling and digitalisation. We’ve always said that – rolled-out in the right way – MTD could mean productivity gains over the long-term.

“However, for many of those who’ve already taken the plunge, the programme has so far yielded higher costs and greater complexity.”

The report also found that the requirement to register for VAT once a firm has £85,000 of turnover serves as a barrier to growth for one in four (24%) firms.

Commenting on this, Cherry said, “As things stand, more than a million firms say they’ve stopped growing their turnover because of the VAT threshold. If we want the economy firing on all cylinders again, reform of this levy – seen as the most burdensome of all by firms – is a must. We must stop the £85,000 turnover threshold serving as a ceiling to the growth we desperately need.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

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Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

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If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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