THE tax system is costing businesses up to £10bn in hidden costs each year, with SMEs bearing the brunt of the burden according to new research by the Association of Accounting Technicians.
With HMRC’s end of the month, self-assessment annual tax return deadline looming, AAT looked at 500 businesses and found SMEs spend around £9.9bn each year on tax compliance, compared to just £100m that larger firms pay.
On average each of the country’s 2.25 million SMEs spends £4,300 on tax compliance. The 9,000 plus larger businesses spend just under £9,000 each.
But most SMEs have no more than four employees while the larger companies have more than 250, and the impact is far greater on SMEs.
Seven out of ten SMEs said the tax system is too complicated, and too much time is spent on tax issues.
Mark Farrar, AAT chief executive, 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 percent of our members, experts at navigating through the intricacies of tax compliance, state that the UK tax system is too complicated.”