The Federation of Small Businesses believes that the complex tax laws in the UK are hampering SMEs’ ability to grow.
They recently carried out a survey, in conjunction with ICM, and discovered that over 75% of small businesses felt as though the tax regulations held them back. Two thirds of small businesses have also turned to financial professionals to guide them through tax matters.
The national chairman of the FSB, John Wright, called on the government to recognise the importance of small businesses if the UK wants a strong recovery from the recession. They also hope to persuade the government to abandon the proposed increase in NI contributions which they think will lead to a rise in unemployment figures.
He added that with three quarters of respondents saying they would expand their business if the taxation system was less complex; there is huge potential for job creation and investment that would provide a welcome boost to the country’s economy.
The Tories last week outlined their plans for reforming the tax system and making banks rather than employers responsible for the collection of PAYE contributions from employee salaries.
There is an unexpected side effect of complex tax regimes such as IR35: there is a possibility that they make umbrella companies more attractive to first-time freelancers and contractors as their tax status, as an employee of the umbrella company, is greatly simplified.
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