UK Business News

Cash-strapped small businesses are losing out on the chance to defer a potential £7.7bn of tax payments due to poor finance skills and a failure to seek out professional advice.  So says a report from the Association of Accounting Technicians (AAT), the leading professional education and membership body for accounting staff, listing the three most common mistakes made by small business as being:

Business rates are the third largest cost to SMEs per annum and rate relief could be worth up to £1200 per firm. Despite this, over £400m of Business Rates Relief goes unclaimed each year, in large part because firms are not aware of the opportunity. The scheme, introduced in 1990 but is due to close on April 1st (today), further impacting on small businesses.

Over a quarter of a million British companies filed their accounts late in 2007, an increase of 25% since 2003, and the trend is expected to continue in 2009 as firms struggle in a recessionary climate.  Fines for late filing increased dramatically in January 2009, with companies now being charged £150 for forms submitted up to four weeks late, or £375 if this period extends to three months. Small businesses also have to pay a 5% surcharge if they are three months late in paying.  In addition, fines automatically double if firms are found to have submitted the previous year’s returns late. Late filing costs for 2007/8 exceed £53m and are likely to increase 2008/9.

Ignorance of the ‘Time to Pay’ scheme, which was introduced in November 2008 (with immediate effect) and is administered by HMRC Business Payment Support Service, adds to the loss.  Only 60,000 businesses, out of a potential 4.7 million, have arranged to spread their tax burden with HMRC.

AAT concedes that it is unsurprising that business owners struggle with the nightmare of the UK tax system – Only India has a more complex tax code. Director of Corporate Resources Tom Kelman has called for greater clarity and easier access to support and guidance from the authorities, but adds that business owners must shoulder some of the responsibility;

“It really is a false economy for business owners not to get professional help with their finances, or to get some financial training themselves.  The costs incurred by basic errors or ignorance could have a major impact and could make or break a small business at this time.”