If you run a small business, do you feel as if you’re getting a fair deal from the existing UK system? Do you feel that the system as it currently stands benefits larger organisations at the expense of smaller businesses, or are you satisfied with things as they are?
Well, according to a recent survey by online accounting software firm, FreeAgent, it appears many small businesses are far from happy. Nearly three quarters (70 per cent) of the small businesses surveyed said that not only did they feel that were getting a raw deal from the current tax system, but they also felt that the current tax regime disadvantages smaller organisations.
FreeAgent found that the problem was particularly worrying for those SMEs which evolve from being sole traders to limited companies. Once SMEs reach that stage of their journey, then they become liable for corporation tax, and that’s when the problems can become particularly acute. The survey found that many SME owners found that working out exactly how much corporation tax they owed was particularly difficult.
The FreeAgent survey also found that 71 per cent of the SME owners surveyed suspected that the UK tax system held back smaller businesses and unfairly benefitted the larger companies and corporations. However, FreeAgent’s CEO and co-founder, Ed Molyneux, believes recent events in Europe may go some way to redressing this apparent imbalance. Mr Molyneux believes the European Commission’s recent decision to demand that Apple repays £11bn in taxes to the Irish Authorities will hit the right sort of note with small businesses and freelancers, and go some way to convincing them that the tax system is actually fairer than they might have feared.
The European Commission ruled that a special scheme which allowed Apple to route profits through Ireland was effectively state aid, and was therefore illegal. The Commission found that Apple’s Irish tax arrangements enabled it to pay a marginal rate of just 0.005 per cent on all of its European profits in 2014. However, Apple’s CEO, Tim Cook, unsurprisingly disagreed with the judgement, arguing that Apple paid more than its fair share of tax in many other ways. He called the judgement ‘maddening’.
Speaking about the survey’s findings, Mr Molyneux said:
“We know that corporation tax is often a stumbling block for micro business owners to deal with, especially when they change from being a sole trader to a limited company.”
“It can be a very confusing thing to understand and many of them have to work very hard to calculate the correct amount to pay, with the shadow of the tax man looming if they get things wrong.
“I’m sure many micro business owners will therefore by happy to see a major multinational company being made to pay their fair share,” he added.
If you run your own small or micro business and are looking for financial advice and support to help to drive your business forward, then contact Steven Glicher accountants. We can offer information and advice on corporation tax planning, business structures, book keeping, business planning and growth, raising finance and VAT registration. Whatever your small business needs, Steven Glicher accountants are here to help you. For more information, call 0161 485 8007 or email firstname.lastname@example.org .