Taxman 'out of touch' with entrepreneurs

Most entrepreneurs feel their relationship with the taxman has seen no improvement – despite last year’s merger of The Inland Revenue and HM Customs & Excise promising the contrary.

The fusing of the tax office in April 2005 has failed to bring benefits and or even “a glimmer of change,” according to 79 per cent of business leaders speaking to Tenon Forum.

The small business advisory found HM Revenue and Customs is “still out of touch” with the needs of company directors, as 89 per cent say they should be consulted prior to any tax reform.

One trend that emerged from the research is how complicated business leaders find working with the tax man, despite the merger pledging more effective communication and better customer service.

Two-thirds of managing directors, financial directors and senior directors in the UK said they are still bogged down by the “technicalities” of remaining in compliance.

They want to see the taxman give a clearer picture of tax liabilities, make filing a tax return simpler and provide clearer instructions on how to complete tax forms.

Andrew Hubbard, Director of Tax at Tenon, said: “A lot of faith has been placed in the ten year plan to reinvigorate the ministry. At present there are some antiquated, and often idiosyncratic, rigidities on business leaders but I’m hopeful that HMRC will make some positive changes to benefit UK businesses in the years to come.

“These rigidities hinder businesses from flourishing either by confusing their cash flow or not recognising the changed nature of business in the 21st Century. It can be particularly difficult for entrepreneurs who are just starting out. Regular consultation with small business leaders will help ensure the relevance of the changes forecasted.”

Tenon cited the plight of one small business owner who said finding out whether his start-up could register for VAT was not as ‘straightforward as one might expect.’

“When we asked HMRC if we could go on a monthly return we were informed that we could only do this if we had been in operation for more than twelve months,” said Mark Sinclair, founder of children’s clothing portal, Gagagoogoo.

“We found it quite bewildering because it’s young companies in particular that need to secure their cash flow. We feel that the tax man really needs to reassess and ensure that the practices they have in place are those which play to the strengths of small businesses.

“At the end of the day, our success will lead to full coffers for them so they should be making it as easy for us as possible,” he said.

 

31st July 2006

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