TaxPersonal TaxTax system hinders small shops

Tax system hinders small shops

Small shops are in decline due to an unaccomodating, complex tax system according to a progress report on small firms by the Better Regulation Task Force.

The report was highly critical of the lack of help given to small shop owners particularly in the areas of VAT and PAYE.

As an example, the VAT registration form is one page long, but the explanatory leaflet that accompanies it runs to 190 pages, which meant the average ‘two-person business was sent 3 cm of Inland Revenue compliance manuals’.

The report cited an ACCA study which estimated owner-managers spent 35% more time coping with regulation now, representing four additional hours per week, than they were four years ago.

And business owners were reluctant to ask for help or bring problems to the attention of authorities because of the fear they would be punished by VAT inspectors for inadvertent errors.

The BRTF called for the simplification of tax schemes and an improvement in the help offered to new small employers operating PAYE for the first time.

It also expressed disappointment with the efforts of the Small Business Service to provide assistance to small companies and called for a ‘detailed action plan’ and a more ‘high-profile’ approach.

Small business minister Nigel Griffiths, praised the report in today’s FT. But he defended the SBS, which he said had successfully fought many proposals that would have added to the regulatory burden.

Links

BRTF report on small firms

Better Regulation Task Force

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