A study carried out by the Federation of Small Businesses (FSB) has showed that small firms are losing £25 billion per year as compliance costs and time lost to dealing with tax admin soar.
The FSB study found that the government’s Making Tax Digital (MTD) initiative has ‘significantly increased costs and admin burdens for small firms’. The business group is seeking to ensure MTD delivers on its potential to improve productivity and profitability amongst small businesses.
It found that the average cost of compliance for a small firm participating in the MTD programme totalled £4,562, which is considerably higher than the figure of £2,960 for those yet to migrate to the new system.
‘Small businesses are fully behind the government’s vision for a high skill, high productivity, low tax economy,’ said Mike Cherry, National Chair of the FSB.
‘Reducing the huge amount of time and money lost to tax bureaucracy would free up billions for investment, upskilling and digitalisation. We’ve always said that – rolled out in the right way – MTD could mean productivity gains over the long-term.’