The FINANCIAL — Four out of five businesses say that tax is an opportunity to drive growth. More than half of businesses said that growth and investment was main motivation in tax affairs. However, four in ten medium-sized businesses say that the tax system is too complex, the same proportion felt that their voice wasn’t being heard enough in shaping tax policy.
Four out of five mid-sized businesses (78%) see tax as an opportunity to drive growth, according to research from KPMG.
The business advisory firm surveyed 700 UK businesses with revenues between £25million and £300million on their attitudes to tax policy, access to tax incentives and the drivers behind financial management.
When asked to identify the opportunities that tax policy provided, job creation was identified by almost half of respondents (48%), ahead of improving margins (39%), investing in capital expenditure (35%), attracting investment (26%) or supporting exporting (29%).
Less than a quarter (24%) said that their priority was to simply meet compliance requirements and fewer than a fifth of mid-sized businesses (19%) said that ‘protecting the bottom line’ is their main concern.
Mike Linter, head of national markets tax at KPMG, said: “Most mid-sized businesses are on board with Government strategy and appreciate the growth opportunities that a well-considered and transparent tax strategy can offer. While it may be a surprise to some that few companies are solely focused on protecting their bottom line, it is encouraging that the prevailing attitude is that tax policy, though incentives and reliefs, can boost employment, investment and revenues.”
Complexity and the voice of smaller businesses
The survey also identified complexity as a barrier for many businesses. When asked to describe the current tax rules and regulations, almost two in five (38%) of mid-sized businesses said that the tax system was too complex.
Concerns over complexity were most evident in the regions outside of the capital. Nearly half of businesses in the Midlands (47%), Yorkshire and North East (46%) and North West (43%), and a significant majority (60%) in the South West, said that the system is too complex. Less than a quarter (23%) in London described the system as too complex.
There were also concerns in the UK regions over whether the tax system was designed to help small and mid-sized businesses succeed and contribute to economic growth. While most businesses in London (90%) and Scotland (84%) agreed that it was, there were far lower levels of consensus in the Midlands (68%), Yorkshire and North East (61%), North West (60%) and Wales (58%).
Linter continued: “Britain is at a junction as it shapes the economy for life outside of the European Union. Addressing imbalances between regions should be a priority of the Government and that starts with creating a tax system that is more supportive and accessible for all businesses.”
Overall there is a high level of satisfaction with engagement on tax policy with more than half (59%) of respondents saying that small and medium-sized businesses had been adequately heard when it comes to developing tax policy. However, nearly three quarters (72%) of respondents said they felt that large multi-national corporations have influenced tax policy too much.
Linter added: “Clearly, there is more work to be done in giving businesses of all shapes and sizes a stronger voice in shaping tax policy. The Government should consider new ways to work with businesses to ensure that they feel engaged and have the chance to steer policy in a way that will foster growth and investment in this critical segment of the economy.”
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