Small businesses 'fear HMRC'

New research has found that small businesses are plagued by fears that a mistake on their tax return will lead to an inspection.

However, the research, carried out for HMRC and the Office of Tax Simplification by The Futures Company, also found that many businesses say they have found HMRC to be less scary than they expected.

The survey quizzed small businesses which handle most of their tax matters themselves and have fewer than ten employees and a turnover below £1 million.

A particular problem flagged up by entrepreneurs who responded to the survey was getting clear information from the tax authority. A quarter said they found it difficult to get a definitive answer to tax questions from HMRC, whilst 30 per cent said they found it hard to understand the information that they were given.

Only 45 per cent of those surveyed agreed that “they have confidence that HMRC staff give the right answer to their questions”.

The report states, “Whilst many have experienced no problems, some small businesses can be disappointed in the quality and clarity of the response they get to questions from HMRC. This can cause significant frustration and increase reliance on other advisers.”