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Addressing the medium-size firm tax burden

COMPLEX tax legislation is one of the key factors holding back greater growth and job creation for medium-sized businesses (MSBs) – but there are ways of making it less taxing.

Research carried out by Grant Thornton and the Confederation of Business (CBI) shows that MSBs, classified as businesses with 50 – 500 employees, are being thwarted by an unnecessarily complicated tax system which is acting as a brake on growth, disrupting cash flow, absorbing management time and dampening export ambitions.

The Stuck in the Middle report argues that MSBs do not have the resources of l

COMPLEX tax legislation is one of the key factors holding back greater growth and job creation for medium-sized businesses (MSBs) – but there are ways of making it less taxing.

Research carried out by Grant Thornton and the Confederation of Business (CBI) shows that MSBs, classified as businesses with 50 – 500 employees, are being thwarted by an unnecessarily complicated tax system which is acting as a brake on growth, disrupting cash flow, absorbing management time and dampening export ambitions.

The Stuck in the Middle report argues that MSBs do not have the resources of large companies to navigate current tax rules, nor do they receive the targeted support the Government directs at small businesses.

Kevin Gale, Practice Leader and Tax Partner at Grant Thornton’s Northampton office, said: “As the economy continues to gather pace, it is vital that businesses do not face administrative burdens that impede growth. The MSB community often struggles to find a voice yet, when asked, they have a lot to say, with tax complexity regularly cited as a major barrier.”

According to Grant Thornton’s research, 45 per cent of MSBs said tax was a factor in slowing down their commercial decision making, while half of respondents (51 per cent) said they spend ten hours a month (120 hours per year) on tax management. In particular, MSBs report difficulties in getting through to HMRC on the phone and then finding the correct person to deal with their request.

Kevin Gale continued: “We need this dynamic segment of business to fulfil its potential in order to drive UK growth as a whole and secure the long-term health of UK plc. Policymakers are beginning to recognise this and should heed our simple proposals to help mitigate these barriers.”

Grant Thornton’s Stuck in the Middle report suggests a number of ways that the tax burden could be reduced for MSBs.

Kevin Gale concluded: “MSBs face particular challenges in coping with tax law. They are not so large that they can self-resource the skills needed to resolve complex tax legislation, or to have the dedicated support that the HMRC customer relationship manager affords.

“We need our growing businesses to invest, innovate and break into new markets to secure the long-term health of our economy and the UK’s tax system should better support these entrepreneurs to do this.”

For a copy of the full report Stuck in the Middle – Addressing The Tax Burden For Medium-sized Businesses contact Rachel Cartwright on

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