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SMEs spend through the nose on tax administration

If you’ve groused about the amount of dosh you pay every year towards tax administration, it turns out you’re in very good – if miserable – company.

In fact, the Federation of Small Business says that SMEs, which include sole traders such as contractors, spend around £500 million on tax admin on a yearly basis. Not only that, but it’s often so ruddy complex that business owners are sacrificing an average of 12 working days to sort their tax administration.

In other words, taxation is so damned complicated in the UK that small business owners routinely take nearly a fortnight in order to get everything squared away. Of course even if you think you’ve ticked all the boxes, you could end up on the receiving end of an IR35 audit that can leave you even further out-of-pocket when it’s all said and done, considering how much it can cost you to defend against a disguised employment investigation by HMRC.

Is it just me or is this completely and totally unacceptable that small business owners are getting raked over the coals like they are? For what it’s worth, SMEs – which include contractors and freelancers – have been working hard to bring some growth back to the economy. SMEs are one of the finest sources of growth we have right now, yet there’s no respite for them when it comes to the taxation system here in the UK, yet big businesses like multinational companies are wandering out of the taxman’s office not even a penny out of sorts despite the millions and millions they owe in taxes.

It’s just bloody frustrating isn’t it? The average SME doesn’t have the kind of cash a multinational can throw around with impunity, yet a small business owner routinely ends up spending thousands of pounds every year to have their tax administration taken care of by a professional. And let’s be honest with ourselves; sure, a large corporation may have a significant impact through the employment of hundreds if not thousands of Brits, but are we to allow these large firms to hold us hostage because they want to maximise their profit margins? Don’t fool yourself – that extra money they make doesn’t get distributed to their lowly wage earners but gets funneled to offshore accounts where it can languish and build up to massive proportions until it ends up being used for some high-powered chief executive’s annual bonus.

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