A new report, called Taxing Times, which has been released by the Federation of Small Businesses (FSB) has laid bare the hurdles that small organisations face when trying to pay taxes.
The report suggests that the time it takes for small firms to pay their taxes is costing them money in the form of working days lost and other finance.
According to Taxing Times, the average small business in the UK spends £5,000 and the equivalent of 15 working days each year on tax compliance.
The report reveals that 46% of SMEs find it challenging when determining the tax rates they are required to pay, while 40% believe that exemptions are confusing.
Elsewhere in Taxing Times, the complexities surrounding VAT, PAYE and employer National Insurance Contributions (NIC) were identified as the most time-consuming taxes to handle – requiring the average SME in the UK to spend 95 hours a year on the three.
The confusion and complex issues that surround the tax compliance process is costing companies, because 77% said it means they pay a specialist to undertake work on their tax returns.
In another dent to the finances of small businesses – at a time when these organisations need all the help they can get in light of the problems many have experienced regarding Carillion – 55% said they are not aware of the tax reliefs available to them.
Mike Cherry, National Chairman of the FSB, believes the government needs to give more guidance as to where these tax reliefs exist for SMEs.
He said: “There are lots of useful tax reliefs out there but many small firms simply don’t know they exist or don’t have the expertise to access them.
“There needs to be a real push from local and central government to ensure small firms are aware of the reliefs available.
“That starts with properly equipping Growth Hubs to point firms to different incentives.
“If we get the small firms that account for 99% of the business population accessing these incentives, we’ll be on the way to the incremental output gains that are critical to closing our productivity gap.”