Complicated tax rules ‘stifle’ business growth

2 March 2010

Three out of four small firms would be better placed to develop their businesses if the tax regime were simpler, a new survey has claimed.

The survey of over 1,600 firms, carried out by the Federation of Small Businesses (FSB), found that 75 per cent of small businesses believe that they would be able to grow if the UK tax system was easier to understand. 

Over a third (34 per cent) of respondents cited income tax as the most difficult issue to deal with, while 52 per cent reported that taxable allowances are the most complex to manage.

On the other hand, a half (52 per cent) thought that VAT was the simplest tax regime.

A half of firms spend less than two hours a week fulfilling their tax responsibilities, but for 10 per cent of firms it occupies more than six hours of their time.

John Wright, the FSB's national chairman, said: "The government must recognise how important small businesses are to strengthening economic recovery.

"As our survey findings show, three in four would grow their business if the tax system was more simple to understand. The potential investment and jobs which could be created through such a move would provide the economy with the boost it needs to sustain recovery."

With a general election looming, the FSB called on the incoming administration to "think small first and get conditions right for entrepreneurs and small businesses to thrive".