Major obstacles for SME's
Three major obstacles for small businesses
Matthew is an accounting, business and tax expert at Woods Russell. He is a Chartered accountant and an Accounting Technician. He also has several degrees in both Economics and Social Sciences. He has worked alongside small business for many years and has extensive expert knowledge on taxation and accountancy matters for small owner managed business. If you would like to call Matthew please ring him direct on 07432 061 731 or e-mail him at matt@woodsrussell.co.uk
1)Making tax digital
HMRC are determined that by 2020 most business, self employed people and landlords will be required to submit and pay their taxes quarterly. This is the biggest logistical shake up of the tax system I can remember and it is likely to place a crippling burden on small business. Despite HMRC assurances it will mean one of two things.
Firstly small business may attempt to do this quarterly upload themselves. As us accountants know, when clients try to do their own accounts and taxes two things generally happen. Either clients end up paying more tax than they are supposed to because they don’t know how to organise their records or do not have the knowledge to claim for all the things they are allowed to by law. Or, more worryingly, clients end up unwittingly committing tax evasion by under declaring tax. How many times have you had to tell a client they can’t claim for both mileage and fuel receipts? And how many people on the street know the difference between entertaining and subsistence? Indeed, it is often the case that the first time I see a client they have made errors in their tax affairs and HMRC are chasing them for thousands of pounds in fines, penalties and tax due.
The second option then, will be to employ a trusted tax advisor or accountant to prepare your quarterly uploads for you and get it right. In this way you will pay the correct amount of tax. However, if accountants are having to prepare a client’s affairs four times a year instead of just once it is impossible to see how some of this cost will not be passed onto the client.
Overall then this is a lose lose situation for the business or trader as they really only have two options, pay HMRC more or pay their accountant for preparing four sets of accounts.
Here at Woods Russell accountants, business and tax specialists, I have lots of contact with small and medium sized business. Clients are always unhappy when stifling or seemingly illogical regulation is created by government, directly impacting their business. There has been a lot of talk recently about how leaving the European Union will reduce red tape for business, however in this blog I identify three massive bureaucratic burdens coming directly from the UK government that are likely (or already have) to have small business howling in protest. I outline these below: