The UK’s small business owners are losing around 12 days a year keeping on top of their tax administration, according to new research from the Federation of Small Businesses (FSB).
The FSB survey found that half of the 2,000+ respondents spent between two to eight hours per month understanding, calculating and completing tax forms. A further 11% spend between two and six days per month.
More than three-quarters (77%) of small business owners spend up to £5,000 - in addition to their tax bill – on paying professionals and for software to keep them up-to-date with their latest obligations.
The FSB is calling for a simpler taxation system for small firms to make it easier and less time-consuming to deal with. It wants the government to build on the cash-based accounting system through creating an ‘enterprise tax’ system which would match the lower corporation tax band of £300,000.
John Allan, FSB national chairman, said: “Small firms are losing a serious amount of time completing these forms and it’s tantamount to money down the drain as they could spend that time growing their business. The economy is just starting to pick-up and it is the UK’s army of small firms that will drive the growth and create jobs.
“There have been long-running issues with complex tax statuses if you’re a sole trader or running an incorporated business. Creating one new tax system, removing the choice will make it simpler.”
Meanwhile, small businesses must comply with the Real Time Information (RTI) programme - a new way of reporting payroll - by April 2014. HMRC had posponed it for businesses with less than 50 employees by 12 months. However, Spar retailer Peter Sichel warned at last week’s Spar Retail Show that retailers face hefty fines if they have not implemented the programme in time.