According to a poll of 500 businesses, conducted by the Association of Accounting Technicians (AAT), UK businesses are hit by £10bn a year in extra tax costs, with the majority falling on SMEs.
The AAT found that SMEs spend approximately £9.9bn each year on tax compliance compared to just £100m that larger firms are paying. The average UK SME incurs £4.4k in tax compliance costs, which is less than half the £8.9k cost to a typical large business. With a much lower number of employees the impact on SMEs is disproportionately greater.
AAT chief executive Mark Farrar said: “SMEs are the backbone of British businesses but some are being weakened by a £10bn tax burden. It is a strong indicator of just how hard dealing with tax can be when 80% of our members, experts at navigating through the intricacies of tax compliance, state that the UK tax system is too complicated.
“Making the tax system simpler could help to lift this extraordinary weight, diminishing the costs that SMEs face. This would give SMEs the space they need to invest in growing their business and hiring more staff – a vital component for the UK’s economic recovery.”