Half of UK SMEs battling unpaid tax with HMRC

JACK BARNETT

OVER half of British mid-sized firms are locked in disputes with the taxman over potential unpaid tax, a sign of the troubles companies encounter when trying to navigate the UK’s complex web of levies.

Some 61 per cent of 500 firms surveyed by consultancy BDO are embroiled in a tax dispute with HMRC.

BDO pointed out that in HMRC’s annual report the organisation said it takes on average 36 months for large businesses to resolve an enquiry. There were 39,500 open tax tribunal appeals at the end of March, an eight per cent jump from 2022.

sector contracted six per cent in the three months to July.

And output is likely to shrink in the coming months, albeit at a slower pace, with firms anticipating activity to drop three per cent in the next quarter.

Consumer services were the biggest drag on the private sector as a whole, the CBI said, leading to companies laying off staff.

Talia Greenbaum of BDO said: “The UK’s tax system can be very complex and difficult to navigate, so it’s no surprise this can result in business tax disputes. Simplifying and modernising the system would help to reduce these difficulties.”

An HMRC spokesperson told City A.M. “we seek to make it straightforward to get tax right and hard to get wrong” and flagged their “efforts on developing customer insight” around SME tax experience.