Small businesses across the UK are being urged to seek professional advice over their tax position, as a report estimates that over £7 billion will be wasted on unnecessary tax payments.
The survey, carried out by unbiased.co.uk, predicts that small/medium organisations in the UK will spend £7.15 billion more than they need to on taxes this year, an average of £1589 for each organisation.
A large proportion of this tax wastage will come from simple oversights, such as not setting up a small firm as a limited company or limited liability partnership, which could easily be avoided if the companies sought sound financial advice about their tax situation.
According to one accountant: “Tax is a complicated subject in its own right, one which many skilled financial professionals specialise in; anyone who assumes they can deal with it all themselves may be left open to all kinds of risks, including interest and penalty fees as well as simple overpayment.”
Even the most innocent of mistakes will be treated seriously by HMRC, ignorance is no excuse and penalties can be huge. Those with multiple business interests are at particularly high risk of being penalised for errors, due to several quirks of the tax system.
Karen Barrett, chief executive at unbiased.co.uk commented: “Tax is a vast and complex subject and business owners often simply do not have the time to manage their tax affairs or understand the allowances available to them whilst also running their business day to day. Currently over three in five1 small business owners say they use a professional adviser, such as an accountant or independent financial adviser (IFA) for their business and it is these professionals who can really make a difference to the amount of tax a business pays.”.