Small Business Saturday

Although the government has given its backing to this weekend’s first ever Small Business Saturday, the Association of Taxation Technicians (ATT) says much more should be done to make the UK’s complex tax system less burdensome for this sector report Harris & Co accountants Northampton, the specialist small business accountants.

Small Business Saturday, to be held on December 7, is a new event which encourages British shoppers to ‘shop small’ and support their local stores. It is modelled on a US initiative which generated $5.5bn (£3.4bn) in sales in 2012. In its introductory year hundreds of small businesses in the UK are planning special deals for customers, showcase events and joint marketing ventures with local media, and the government has given its support via media materials and a Twitter campaign.

ATT President, Yvette Nunn, said: ‘The UK has often been referred to as a nation of shop-keepers. Given this, it is surprising how unsympathetic our tax regime and benefits can seem to small business shop-keepers.’

Nunn singled out three areas where the association believes the government should take action to make taxation simpler for the UK’s 4.8m small businesses. The first is the new optional ‘cash basis’ rules, introduced for businesses with annual turnover of no more than £79,000 upon entry, which she said are far more complex than intended.

‘Without seeking the assistance of a tax adviser – and most small businesses will not – it is notoriously difficult to calculate case-by-case whether the cash basis is more beneficial than the normal basis of preparing accounts. As the cash basis is voluntary the uptake of the rule is likely to be low over the coming tax year. This is a great shame – a user-friendly and genuinely simple cash basis system could have made it easier for a small business owner to manage their cash flow and budget for their Self-Assessment tax bill,’ Nunn said.

The second hurdle is the requirement for anyone who starts up a business as a route out of unemployment to produce monthly details of their income and expenditure under the new Universal Credit rules, which Nunn says also work against businesses with seasonal trading, since they do not give proper recognition to any loss that they incur in their low season months.

Finally, ATT says that the new Real Time Information (RTI) reporting requirements create particular difficulties for businesses that employ part-time workers – especially where hours differ from week to week as can be the case for many shops and other small businesses.

Nunn said: ‘While the government has taken some useful steps to help small businesses in the UK, for example with the introduction of the £2,000 National Insurance employment allowance from April 2014, it is still the case that paperwork burdens continue to overwhelm some struggling small businesses. Small Business Saturday should be a spur to action for simpler taxes for small businesses.’