The Chancellor is starting to focus on redressing the balance between big business and smaller companies with several major initiatives announced in his recent Budget – but research from MarketInvoice suggests he will need to do much more to overcome the scepticism of UK SMEs.
There is still a serious tax gap that needs to be addressed, with a recent survey by accountancy firm MHA MacIntyre Hudson revealing that of 316 FTSE 350 companies surveyed, almost half (46 per cent) were paying less than the current effective rate of 20 per cent in corporation tax.
Moreover, a recent investigation by The Sunday Times reveals that at least six of Britain’s ten multinationals, including British American Tobacco (BAT); Lloyds Banking Group and Shell, paid no UK corporation tax in 2014 despite combined global profits of more than £30 billion.
Anil Stocker, co-founder and CEO of MarketInvoice says, ‘Small business owners feel cheated of their hard-earned profits when they see large corporations exploiting tax loopholes, while they have the taxman scrutinising every penny.
‘The Budget went some way to righting this wrong, but actions speak louder than words. Until small businesses feel see the change in their own books, the government’s reputation will remain tarnished.’
There are signs that George Osborne is starting to address these issues, however, with more than a quarter of small businesses picking ‘Scrap Corporation Tax for SMEs and make sure big business pays more’ as their number one ‘wildest dream’ policy for the Budget – a measure the Chancellor delivered last week.
At the same time, he helped further address issues of balance with announcement of fewer loopholes for multinationals and more tax breaks for SMEs including the headline declaration that from April 2017, 600,000 small firms will not have to pay business rates, while 250,000 will pay lower rates.