Raymond Doherty 8 Jan 2018 11:54am

SMEs paying more corporation tax than big business

Small businesses in the UK are paying a higher effective rate of corporation tax than big business

The rate paid by SMEs was 21.7% in 2016, which is higher than businesses with a turnover of more than £1bn, who paid an effective rate of 20.1%, analysis from accountancy firm Moore Stephens has found.

The balance has reversed since 2010 when SMEs paid a headline corporation tax rate of just 21% compared to the main rate of 28%.

A central reason for the imbalance is lack of expertise and advice on possible tax relief, according to Moore Stephens.

“The statistics suggest that larger corporates may be somewhat better at identifying and claiming the available reliefs than their SME counterparts.

“Furthermore, there are several tax reliefs targeted at SMEs like Research and Development tax credits and 100% Capital Allowances reliefs, but despite this they remain stubbornly under-claimed, mainly through lack of awareness,” Mike Cooper, partner at Moore Stephens said.

The amount of corporation paid by multinationals in the UK has dominated the headlines in recent years with companies like Apple, Google, Vodafone and Starbucks lambasted for alleged tax avoidance.

A recent report found that the vast majority (89%) of people believe that tax avoidance is morally wrong, even if it is legal, while 85% think it is too easy for large companies in the UK to avoid paying tax.

One in four people are currently boycotting the products or services of a company because it does not pay its “fair share” of tax.