SMEs cite VAT as ‘biggest administrative headache’

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VAT creates the biggest administration burden for around two-thirds of businesses in the UK, research from the British Chambers of Commerce (BCC) has claimed.

The report, which polled more than 1,100 businesses of all sizes, found that 64% were bamboozled by an array of rates and rules to comply with VAT legislation.

This percentage is likely to increase in the near future as VAT-registered businesses with taxable turnover of more than £85,000 prepare for Making Tax Digital to take effect from April 2019.

More than half (54%) said payroll tasks were the next biggest compliance burden, with many firms confused by the national insurance contribution thresholds and rates they are required to pay.

Corporation tax (41%) proved to be the third biggest administration headache for businesses in the UK, while three in four (75%) respondents feel HMRC red tape has increased in the last five years.

Adam Marshall, director-general of the BCC, said:

“It’s time to tackle the huge costs and complexities of the UK tax system, which sap away time and resources that could be better spent raising business productivity and growth.

“We want to see more investment in frontline HMRC support that’s geared towards making compliance easier for SMEs.

“There should also be greater independent scrutiny of new tax proposals with the aim of minimising the administrative burden on business.

“HMRC must be given both resources and a clear remit to focus more on supporting, rather than pursuing and punishing, small and medium-sized firms as they work to get tax right.

“Making tax administration simpler would provide businesses with more time and headroom to focus on investment and growth.”

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