According to new research from the Association of Accounting Technicians (AAT), UK businesses are hit by £10bn a year in extra tax costs, with the majority falling on SMEs.
The survey of 500 businesses found that SMEs spend about £9.9bn each year on tax compliance compared to the £100m that larger firms shell out.
UK’s SMEs incur £4,376 in tax compliance costs on average, which is less than half the £8,907 large businesses typically pay. Although the average tax burden for SMEs is lower, most have only a few employees so the impact on them is much greater.
AAT chief executive Mark Farrar said: “SMEs are the backbone of British businesses but some are being weakened by a £10bn tax burden. It is a strong indicator of just how hard dealing with tax can be when 80% of our members, experts at navigating through the intricacies of tax compliance, state that the UK tax system is too complicated.
“Making the tax system simpler could help to lift this extraordinary weight, diminishing the costs that SMEs face. This would give SMEs the space they need to invest in growing their business and hiring more staff – a vital component for the UK’s economic recovery.”