Sage Blog

The tax situation for small and medium sized enterprises (SMEs) has increasingly become a focus for debate in this election (For small businesses the choice on tax is not straightforward). Putting the spotlight on this issue is good news for small businesses, as research amongst our own customer base suggests that many find the complexity of the tax system frustrating. The overwhelming majority (72%) of UK SMEs we surveyed, also indicated that the complexity of HMRC rules is a barrier to start-ups.

We surveyed 2,000 of our SME customers in March 2010, from our 800,000 strong UK customer base. Insights from the Sage Omnibus, enables Sage to highlight the challenges facing UK firms and provides a barometer for British business.

The survey discovered that seventy-seven per cent of businesses felt that the current tax system is preventing them from taking advantage of tax benefits and breaks. Furthermore, sixty per cent of SMEs polled did not know what breaks they may be eligible for.

Our research shows that there is a lot of confusion amongst the UK business community about the current tax system. At times of economic uncertainty, knowing what tax benefits and breaks your firm is entitled to can make the difference between success and failure. My advice to all businesses would be to seek professional advice from an accountant to inform them of any breaks that they may be entitled to.

Interestingly, more small businesses would choose to make the current tax system simpler (34.5%) over freezing VAT at its current rate of 17.5% (25.9%), highlighting the extent of their frustration. When asked what single change they would like the government to implement, SMEs indicated that they would also like to see the planned 50p income tax for top earners (5.8%)scrapped.

Jayne Archbold, Managing Director of the Accountants’ Division