Danny McCance 19 Feb 2018 04:31pm

SMEs spend 95 hours per year sorting taxes

SMEs are spending on average £5000 each year to get their taxes in order as well as three weeks on administration

Half of SMEs also don’t feel informed about the relevant tax reliefs available to them, according to research by the Federation of Small Businesses (FSB).

It revealed that 46% of SMEs find it challenging to determine the tax rates they are required to pay, while 40% say the exemptions are confusing.

Almost half (47%) think that business rates have made growing their businesses more difficult.

This also means that three quarters of SMEs require specialist help to get their tax bills right.

“Small firms by and large understand a tax like VAT, for example, but the sheer complexity of VAT administration means they spend 44 hours a year filing returns. It’s no wonder the majority end up shelling out for expert help,” said FSB national chairman Mike Cherry.

“The three working weeks and thousands of pounds a year that small firms lose to tax compliance is a huge drain on national productivity. That lost time and resource is the real issue, not the length of the tax code,” he added.

He believes the solution is not in simplifying the UK tax code, but in prioritising overhauling the compliance process.