Small British businesses have struggled to meet the self-assessment tax return requirements in time for this year’s Halloween deadline, according to research from Receipt Bank.
The new study revealed that more than a quarter (27%) of UK SMEs have missed the tax deadline set by HMRC, with one in three (34%) delaying their financial admin to the last minute.
Commenting on the findings, Adrian Blair, CEO at Receipt Bank said: “Two things are holding back British business: wasting time on manual admin and overpaying on tax.
“Small British businesses are spending 120 hours a year on finding and filing their financial paperwork – leading many to lose control of their balance sheet and 27% to give up more money than needed to the taxman because they’ve missed deadlines.”
The report also showed that 18% of British SMEs have failed to proceed all their tax-deductible paperwork with the tax collector, meaning they are forgoing money back.
Zena Hanks, Partner at Saffery Champness, commented: “While all eyes are firmly trained on Westminster it’s easy to forget that the world does carry on, and people may get a fright this Halloween if they suddenly realise they’ve missed HMRC’s paper tax return deadline.
“There are many reasons why paper tax returns are still being used, including that some taxpayers simply don’t want to use the online system or are unable to due to issues such as access to a computer and the internet. However, a key issue is that, because of the complexities of the tax system, in certain circumstances and for some individuals with particularly complex affairs, HMRC’s online systems can’t always calculate the tax liability correctly. To get around this a paper tax return needs to be filed.”
Hanks added: “If the paper return is filed with HMRC after the 31 October paper filing deadline, a reasonable excuse form needs to be submitted to stop unnecessary late filing penalties being levied. HMRC ‘s ambition is to become one of the most digitally advanced tax administrations in the world. For those who do use HMRC’s online system we are starting to see a small amount of pre-populated information landing in the taxpayer’s self-assessment record; information such as employment income and state pension income.
“As HMRC’s systems become more sophisticated no doubt we will see more of the information that is already being fed directly into HMRC in turn being pre-populated against the tax payer’s self-assessment records – and this will hopefully help to streamline the tax return process for taxpayers. However, before we see the final demise of the paper tax return much will have to be done to overcome the increasingly complex tax system and the plethora of calculations needed to calculate a tax liability where there are particular taxpayer complexities.”
The deadline set by the government has translated into a worry for most SMEs, with many struggling to complete this level of financial admin. This is highlighted by the findings, which disclose that a third of UK SMEs believe dealing with financial admin has prevented them from focusing on business growth.
In addition, the report revealed that half of small British businesses dislike processing receipts, along with 38% believing handling financial paperwork to be a source of stress. Over a fifth have also admitted to staying up all night whilst being worried of financial management and reporting deadlines.
Statistic overview:
- A quarter of UK businesses (27%) admit to missing tax deadlines
- One in three (34%) SMEs leave filing to the last minute
- One in five (18%) forgo money back from the taxman because of missing paperwork
- One in five (21%) say tax reporting deadlines keep them up at night with worry
HMRC’s deadline for self-assessment tax returns fell on Halloween this year, and are required to be submitted by the UK’s 3.5 million sole proprietorship businesses. For more information, visit the gov.uk page on self assessment tax returns.