9th July 2012
Small businesses worry about filling in tax returns correctly and dealing with HMRC, according to a report carried out for the tax authority.
The survey, which focused on smaller businesses employing fewer than ten people with a turnover of less than £1 million, found there was an underlying 'fear' of getting things wrong and were haunted by the possibility of inquiries from the taxman.
While anxiety was most common for new owners, the problem persists throughout the lifetime of a business.
Just under half of small businesses worry that they may have made a mistake with their tax form even though they keep good records and are careful when filling it in, while nearly a quarter found filing their tax returns difficult.
Around 28 per cent worry about being investigated and fined for mistakes they may have made.
However, the research, undertaken by The Futures Company on behalf of HMRC and the Office of Tax Simplification, said that many businesses often found the experience of dealing with HMRC 'less scary' and more positive than anticipated.
Horror stories about inquiries and fear of penalties 'can make small business owners overly anxious', said the report.
Tax advisers are used by 42 per cent of those surveyed because they view tax as too complicated to do it alone and also because it saves time. Anxiety levels were slightly lower for those who use an agent to help with tax administration, with 62 per cent saying they would always want to use an adviser to assist them.
Nearly half of small businesses struggle with expenses and want a simpler system to calculate claimable expenses.
A consultation into simplifying income tax and expenses for small businesses closed last month, in a Government response to concerns that red-tape is hampering businesses achieve growth.
We can help with tax returns. Please talk to us to find out more.