02/05/19

UK: More Tax Guidance Needed, Not Enforcement, Firms Say.

As published on tax-news.com, Monday 29^th April, 2019.

UK businesses believe that the UK tax system is fundamentally unfair and they want more support to stay compliant, according to new research released on April 23 by the British Chambers of Commerce.

The BCC's survey of over 1,000 firms from across the UK found that nearly three-fifths (58 percent) of respondents think that the UK tax regime is unfair for their business. The findings largely signal concerns over how HMRC applies the tax rules to different types of firms.

Two-thirds (67 percent) of respondents don't believe that HMRC applies tax rules fairly across all sizes of business. Micro firms are more likely to have that view (70 percent) compared to their medium and large counterparts (59 percent).

64 percent of companies disagreed that HMRC applies tax rules fairly regardless of where the company is domiciled.

The results also found concerns over the quality of service provided by HMRC. One in two (49 percent) firms believe HMRC doesn't provide the support they need to be compliant. This figure is higher for micro firms (51 percent), compared to medium and larger firms (42 percent).

The BCC is urging HMRC to respond to the findings by matching the level of funding for support and advice for businesses as for tax avoidance work.

As well as calling for the Government to ease the administrative burden, the BCC also called for the government to pledge to introduce no new input taxes and other significant costs on businesses for the remainder of this parliament.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: "These results reflect a strong impression among businesses that the current UK tax regime isn't a level playing field. When it comes to compliance there is a tendency for HMRC to see smaller businesses as low-hanging fruit and as a consequence they feel under the constant threat of being called out for getting things wrong in a tax system that has grown ever more complex. In contrast, action to tackle persistent compliance issues among a small minority of firms remains frustratingly slow."

"There is also widespread disappointment over the escalating burden of up-front taxes and costs of doing business in the UK, particularly at this time of heightened uncertainty. This has proved to be tipping point for many smaller firms who typically operate on a tight cashflow."

"HMRC must step up efforts to provide better support to smaller businesses to get their tax right, rather than simply pursuing and enforcing penalties. This should include matching investment in frontline HMRC help towards SMEs, with their work on non-compliance and tax evasion. More also needs to be done to address the escalating burden of upfront costs and taxes to provide firms with much-needed headroom to get on and invest, train their staff, and compete on the global stage."