Tax & admin · 26 May 2016

Tax system labelled unfair by majority of micro businesses

on hold
Over half of freelancers hang up before being put through to HMRC

Two-thirds of Britain’s micro business owners have dubbed the current tax system as biased and unfair, while a further half feel almost powerless to influence government policies that have an impact on their business.

Research conducted by Chorus – a new membership organization funded by Crunch Accounting to represent the interests of Britain’s smallest firms – has found that just 15 per cent of micro business owners feel as though current political debates represent their needs and concerns.

Only ten per cent of micro business owners feel supported and are satisfied with the current tax and benefits system, with late payments and cash flow management cited as two key areas the government should offer greater help.

One-fifth of owners said that late payments would be the first area they would ask for support for, whilst 18 per cent said they most needed help managing cash-flow.

Chorus’s micro business ambassador Jason Kitcat said that micro business owners deserved a stronger voice, both in local communities and in central government. “Micro businesses are the unsung heroes of our time. They represent a staggering proportion of the UK’s economy, employing 8.4m people.

“Yet our research shows that they feel ignored by political debate and powerless to influence policy, with a taxation and benefits system that is stacked against them. It’s time for decision makers in government to understand and value the hard work of micro businesses.”

The news comes alongside a National Audit Office (NAO) announcement that poor customer service at HMRC cost taxpayers a total of £97m last year, with Britain’s sole traders and freelancers bearing most of the brunt.

The NAO found that lengthy periods on hold had resulted in over half of freelancers hanging up before being put through to HMRC on the phone, while 38 per cent of freelancers fail to call HMRC at all due to the expected waiting time.

More than one-in-five freelancers regularly experience HMRC system failure online, and 15 per cent have reported spending between one and two hours on hold with the tax office at one time.

Read more from our expert about how Britain can plug it’s late payments hole.

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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