Research conducted on behalf of HM Revenue & Customs has revealed that small business owners worry about making mistakes with their tax, which could incur a visit from the taxman. Almost a third of the small businesses surveyed didn’t understand the information supplied by HMRC, while only 45 per cent are confident that information provided by HMRC staff is correct. Obtaining a clear answer to a question proved to be difficult for almost a quarter of the respondents.
The survey questioned small businesses with 10 employees or fewer, a turnover less than £1m and which managed their own tax affairs without any assistance. The report reveals that most businesses have not experienced any difficulties with HMRC, although some businesses are unhappy with the responses received from HMRC to queries. The study also found that businesses which were fairly knowledgeable about tax still feared contact from HMRC, as they were worried about making mistakes. Although a company may keep accurate and legible records, the survey revealed that half of businesses still fear making a mistake.
Businesses which outsource to a professional tax agent such as a low cost accountants are less likely to be anxious. The most common problems include understanding information and forms which are issued by HMRC. Expense is another area which causes confusion, with nearly half of respondents admitting they were unsure of what was an allowable expense. The report does conclude that misconceptions of dealing with HMRC are rife, while the actual experience is typically helpful.