The Federation of Small Businesses (FSB) has carried out a study which shows that small firms are losing £25 billion per year due to increasing compliance costs and time lost to dealing with tax admin.
The government’s Making Tax Digital (MTD) initiative has ‘significantly increased costs and admin burdens for small firms’ claims the FSB’s study. The business group seeks to ensure MTD delivers on its potential to improve productivity and profitability amongst small businesses.
The study found that the average cost of compliance for a small firm participating in the MTD programme totalled £4,562. Considerably higher than the figure of £2,960 for those yet to migrate to the new system.
‘Small businesses are fully behind the government’s vision for a high skill, high productivity, low tax economy,’ said Mike Cherry, National Chair of the FSB.
‘With costs soaring and the Budget approaching, it’s now time to see the policies that will get us there.
‘Reducing the huge amount of time and money lost to tax bureaucracy would free up billions for investment, upskilling and digitalisation. We’ve always said that – rolled out in the right way – MTD could mean productivity gains over the long-term.’
“While some small businesses are finding the switch to MTD a tough task, we are doing our best to help our clients switch without much disruption to their regular work schedule. Systems like KashFlow can even make the admin side of your business easier, it allows you to raise your sales invoices and detail your expenses all in the same place.”Nigel Holland