In a survey of small business owners, which include contractors owning Limited Companies, The Federation of Private Business (FPB) has discovered that over half of them (57 per cent) are prepared to pay more tax in exchange for a simpler and fairer tax system.
Of those polled, 50 per cent said that they would pay more under a simplified tax regime provided it prevented tax avoidance by their bigger competitors. The latter often have the resources to exploit tax loopholes geographically. Almost half of them said they would tolerate higher tax payments if legislative red tape were reduced.
The FPB’s Chief Executive Phil Orford noted that the cost of complying with the UK’s labyrinthine tax system is so high – in terms of time, money and the vagaries of IR35 legislation – that many small business leaders are of the view that a little more tax would be a “price worth paying” if the system were to be simplified. He added that if the government is serious about its commitment to stimulating small business growth, a streamlined tax administration should be a top priority.
Mr Orford was scathing about current tax loopholes, which hugely favour bigger firms. Larger retailers can, for instance, set up shop in places like the Channel Islands, where they proceed to deliberately undercut smaller shops and internet retailers, a practise which leads to flagrant tax abuses and distorts competition. The recent plans announced by HMRC to clamp down on tax avoidance fall short in several areas, including this one.
Reforms to incentivise small business growth are “desperately needed,” he went on; small firms need to invest their time and money in expansion and future planning rather than in an unwieldy and unfair tax system.