Small companies are continuing to pay higher rates of corporation tax than their larger counterparts, according to new research published this week.
A study carried out by Oxford University found that Britain’s 100 biggest companies actually pay a lower rate of corporation tax than smaller firms in all but two sectors: textiles/wood, and paper/publishing.
The Oxford researchers even found that approximately a sixth of companies with “positive” profits don’t pay any corporation tax at all.
Meanwhile, research carried out by PricewaterhouseCoopers (PwC) on behalf of the Hundred Group, the organisation which represents the finance directors of Britain’s biggest companies, has revealed that its members’ corporation tax payments fell by over 40% in 2009-10.
Phil McCabe, of the Forum of Private Business, told Growing Business:
“This is worrying news, particularly in the light of HMRC’s plans to impose fines of up to £3,000 for bookkeeping mistakes – which will hit struggling small firms much more than large companies.
“It is unacceptable that the UK’s tax system has such a disproportional impact on small firms compared to big businesses. Tax and tax administration is one of the major barriers preventing SMEs from growing. Where large companies have the time and resources to limit their tax liabilities, small firms simply do not and are often seen as an ‘easy target’ by the taxman.”
McCabe also called for better information, guidance and support to help entrepreneurs, rather than “using the stick to force them to comply," and said that, if small firms are to drive economic growth, “we need to remove these businesses from taxation wherever possible.
“Current enterprise policies – including the planned cuts in corporation tax - are far too focused on big businesses and their tax avoidance plans. Instead, it is small business that should be able to benefit from ‘special measures’ on tax.”
© Crimson Business. Ltd 2011