Three quarters of UK businesses believe the cost of complying with the UK tax system has escalated in the last five years according to the British Chambers of Commerce (BCC), which is calling for the government to cut ‘red tape’ and delay Making Tax Digital plans
A survey conducted by the BCC and VAT software specialist Avalara with of over 1,100 firms from across the UK found that three in four believe the overall burden of tax administration and compliance has increased.
Two-thirds (64%) of businesses said VAT creates the biggest administration and compliance burden, a finding mirrored in the responses of firms of all sizes and sectors. PAYE/National Insurance Contributions (54%) and corporation tax (41%) were identified as the next biggest sources of compliance burdens.
Adam Marshall, BCC director general, said: ‘Companies now routinely cite tax administration and compliance, rather than regulation, as their biggest single source of administrative headaches.
‘HMRC must be given both resources and a clear remit to focus more on supporting, rather than pursuing and punishing, small and medium-sized firms, as they work to get tax right.
‘We want to see more investment in frontline HMRC support that’s geared towards making compliance easier for SMEs. There should also be greater independent scrutiny of new tax proposals with the aim of minimising the administrative burden on business.’
The BCC is calling for the introduction of Making Tax Digital to be delayed for all businesses until the start of the 2020/21 financial year, to give HMRC the breathing space to engage effectively with businesses, ensure that the necessary software is in place and raising levels of awareness about the impending changes.
‘While steps have been taken to free-up capacity, businesses remain concerned that HMRC may still lack the resources at HMRC to deliver MTD at the same time as supporting firms through the Brexit process as well as day-to-day compliance issues,’ the BCC stated.
Report by Pat Sweet
