Does our tax system stop enterprise growing?
Nine out of 10 small businesses believe they need an effective voice within HMRC to ensure their progress is not constrained by the bureaucracy of the UK‘s tax regime, research by PwC suggests
The UK’s over-complicated tax system is stifling companies from expanding, research from Pricewaterhouse Coopers (PwC) suggests.The survey of private enterprises revealed that only a quarter (27%) of smaller firms felt the current tax system was supportive of their needs, contrasting with 45% of larger organisations, while nine out of 10 small firms felt they needed an effective voice representing their interests within HMRC.
On average, 35% of business owners saw the UK tax regime as encouraging for enterprise, although this had increased from 21% 12 months ago.
The study also revealed that almost half (49%) of companies want the tax system to be simplified to lighten the compliance and administrative burden on private enterprises, while overall use of tax incentives remains low, at 14% compared to 11% a year ago.
There is still a negative perception of the UK tax system, and its support for enterprise, and that significant improvements are needed. This must be addressed if we are to create a true enterprise economy
“It is promising to see a more positive view coming from UK privately-owned companies,” said Kevin Nicholson, UK head of entrepreneurs and private companies at PwC.
“However, these messages must be balanced against findings that suggest there is still a negative perception of the UK tax system, and its support for enterprise, and that significant improvements are needed. This must be addressed if we are to create a true enterprise economy,” he added.
The survey also revealed that almost three-quarters (69%) of firms saw themselves as ‘mature’, suggesting there is only a limited amount of companies that are actively looking to expand.
“If the tax system is not changing behaviour or positively influencing enterprise - particularly among small business - should investment be focused on simplification instead?” asked Nicholson.
“However, it is important to recognise that this would come at a cost to some. For example, simplifying the system by eliminating some reliefs would reduce the administrative and compliance burden for many small businesses. In contrast, larger businesses could be disadvantaged because the findings suggest they are more likely to use those incentives and reliefs,” he added.
