The Forum of Private Business (FPB), the small business support and lobby group, has called on the chancellor to focus on three core themes in his autumn statement; simplicity, consistency and productivity.
Tax simplification is sorely needed and, long term, Forum members would like a tax system that could be understood by every business owner, allowing them to police their tax payments accordingly.
In the meantime the Forum would like to see culture change at HMRC to take the complexity of the current system into account. This would include:
• Better communication systems in place – customers should have the right to dictate the most convenient way of being assessed and paying their tax as is the case when businesses deal with other businesses. They should also expect the phone to be answered if they have a concern
• A less aggressive and more collaborative approach to tax investigations where there is no evidence of aggressive tax avoidance
• Being part of the deregulation agenda – Forum members see the distinction between tax administration and other forms of regulatory compliance as artificial.
In the short term the tax system could be improved by simplifying the business rate calculation and making it more transparent. The current system is too complicated and every time there is a revaluation (the next one is due in 2017), business owners are defrauded out of millions by charlatans.
Although small firms are more agile than larger companies, consistency is still important in allowing businesses to plan for the medium and long term:
• Reduce the cost of employment to allow smaller firms to meet the twin criteria of pension auto-enrolment and the National Living Wage
• Remove the current inconsistency by introducing anti-money-laundering legislation and greater background checks by Companies House before business start trading
The Forum believes that red tape and non-operational activities have historically damaged Forum members and prevented growth. The public sector (including enforcement agencies) could do more to make the state more productive in supporting businesses, particularly by encouraging co operation on issues that might cross departmental boundaries.
• More proportional administrative compliance, most regulatory compliance is based on best practice for larger businesses. These firms require additional processes in place to monitor disparate locations or a large number of employees. Companies with a handful of employees do not need such systems in place as the owner can observe his employees to ensure their work meets the requirements of the company and the state.
• More money and choice for management and specialist training, in particular more focus on opening up universities and other educational institutions to smaller firms will give them additional skills for business growth
• Appoint a suitable Small Business Commissioner with the powers to pass the “Carlsberg test” - to stand up to a global corporation and push them towards good payment practices (typically 30 days)
Ian Cass, MD of the Forum stated: “Our members want consistency, simplicity and support in making themselves as productive as they can be. Employers in a number of industries are going to struggle with the rising cost of doing business over the next few years and all areas of government need to be supportive of such firms. In particular the Forum is encouraging HMRC to be more supportive of SMEs and improve the way it communicates and treats its customers.
“37% of our members tell us that the biggest squeeze on their cash flow is the day to day running of the business – twice as many as those who see late payment as the biggest problem. Freeing up the time of business owners and their management team would give small firms the opportunity to plan for growth and invest in the skills they need to do so successfully.”