October 04, 2013
The UK's small business owners are losing around 12 days a year keeping on top of their tax administration. And they also spend a collective half a billion pounds per year on professional advice and tax-related software.
These are the findings of a new survey by the Federation of Small Businesses (FSB). The poll finds that half of respondents spend between two and eight hours per month understanding, calculating and completing tax forms. A further 11% spend between two and six days per month.
And tax administration is also a drain on financial resources – not just time – according to the FSB research. More than three quarters (77%) say they spend up to £5,000 in addition to their tax bill, paying professionals and buying software so they can keep up-to-date with their latest obligations.
While costs vary, around two thirds of small business owners estimate that they have to spend £3,651 annually on tax obligations – which means at least £490 million per year is spent by small firms on managing their tax affairs.
These costs are putting businesses under significant pressure, says the FSB. Almost a third (30%) of firms say that cash-flow problems have prevented them from paying their taxes on time, while 19% say that difficulty understanding what is required or confusion over payment dates has meant they've paid late.
The FSB is calling for the Government and the Office for Tax Simplification to build on the cash-based accounting system by creating an "enterprise tax" system which would match the lower corporation tax band of £300,000.
This, it says, would create a more efficient system and would mean small firms could spend less time dealing with their tax commitments and reduce outgoings on tax advice.
John Allan, FSB national chairman, said: "Small firms are losing a serious amount of time completing these forms and it's tantamount to money down the drain as they could spend that time growing their business."