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The number of business owners who believe the taxman is doing a good job for enterprise is on the up, suggesting higher rates on micro firms have gone widely unnoticed. About a third of privately-owned companies surveyed, most of which had no ambition to grow, said the tax system encourages business - up from around a fifth the year before. But experts at PricewaterhouseCoopers, which quizzed 423 executives and company directors, said that overall, the proportion saying the tax system is supportive “remains low.” More than half said its complexity deters people from enterprise, almost as many said it should be simplified and 90% want an effective voice to represent their interests to HMRC. Positively the tax authority’s voice is being heard: firms’ awareness of tax initiatives has leapt 15% in the last year, meaning more than half know about incentives, despite “low” uptake. Schemes for R&D were the most popular, followed by initiatives for business taper relief and enterprise management, says the survey taken between March and June this year. Out of the sample, nearly three quarters characterised their business as ‘mature’ or ‘stable’, “suggesting that there is a limited proportion of business that want to grow,” PwC said. Although normally characteristic of micro companies, the trend was among business both medium and small, where small business respondents had turnover of less than £2m a year. About a quarter of ‘small’ firms said the tax system was supportive, but most believe it is weighed in favour of bigger businesses, of which 45% agreed it encourages their enterprise. In particular, large companies were the dominant users of tax incentives or initiatives, yet R&D, the most popular scheme, was only used by 15% of all the businesses surveyed. Kevin Nicholson, of PwC, said the findings reinforce the expectation that tax advisors, business and government must work together to “make the tax system work for enterprise.” “This raises the question about whether the current approach of tax reliefs and incentives, designed to encourage their growth, is the right approach,” he said. “If the tax system is not changing behaviour or positively influencing enterprise - particularly among small business - should investment be focused on simplification instead?” But he conceded that cutting the number of tax schemes, at a time when companies are growing more aware, would come at a cost to some. “Simplifying the system by eliminating some reliefs would reduce the administrative and compliance burden for many small businesses,” Mr Nicholson said. “In contrast, larger businesses could be disadvantaged because the findings suggest they are more likely to use those incentives and reliefs.” Overall PwC said it is “promising” to see a more positive view coming from privately-owned companies about the tax system in the UK. But the professional services firm cautioned: “These messages must be balanced against findings that suggest there is still a negative perception of the UK tax system, and its support for enterprise, and that significant improvements are needed. This must be addressed if we are to create a true enterprise economy.” Oct 5, 2007 Email this article Printer friendly page Previous Page
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