Tax is ‘opportunity to drive growth’

Christine Hewson

Seven out of 10 mid-sized businesses in the North West (71%) see tax as an opportunity to drive growth, according to research from KPMG.

The business advisory firm surveyed 700 UK businesses with revenues between £25m and £300m, including 100 respondents in the North West, on their attitudes to tax policy, access to tax incentives and the drivers behind financial management.

When asked to identify the opportunities that tax policy provided, job creation was identified by more than half of respondents (56%), ahead of investing in capital expenditure (39%), improving margins (33%), supporting exporting (29%) and attracting investment (24%).

Less than a quarter (22%) said that their priority was to simply meet compliance requirements and only a fifth of mid-sized businesses (20%) said that ‘protecting the bottom line’ was their main concern.

Christine Hewson, head of tax at KPMG in the North, said: “Most mid-sized businesses in the North West are on board with Government strategy and appreciate the growth opportunities that a well-considered and transparent tax strategy can offer.

While it may be a surprise to some that few companies are solely focused on protecting their bottom line, it is encouraging that the prevailing attitude is that tax policy, though incentives and reliefs, can boost employment, investment and revenues.”

The survey also identified complexity as a barrier for many businesses. When asked to describe the current tax rules and regulations, more than four out of 10 (43%) mid-sized businesses in the North West said that the tax system was too complex.

The concerns were echoed by businesses outside of the capital, notably in the Midlands (47%) and Yorkshire and the North East (46%), and South West (60%). Less than a quarter (23%) in London described the system as too complex.

There were also concerns in the regions over whether the tax system was designed to help small and mid-sized businesses succeed and contribute to economic growth.

While most businesses in London (90%) and Scotland (84%) agreed that it was, there were far lower levels of consensus in North West where only three in five (60%) agreed. Feelings were shared in the Midlands (68%), Yorkshire and North East (61%)and Wales (58%).

Hewson continued: “Britain is at a junction as it shapes the economy for life outside of the European Union. Addressing imbalances between regions should be a priority of the Government and that starts with creating a tax system that is more supportive and accessible for all businesses.”

Overall there is a high level of satisfaction with engagement on tax policy with more than half (59%) of respondents saying that small and medium-sized businesses had been adequately heard when it comes to developing tax policy.

But, in the North West, businesses were less confident and only 46% agreed. Nearly three quarters (75%) of respondents in the region said they felt that large multi-national corporations have influenced tax policy too much.

Hewson added: “Clearly, there is more work to be done in giving businesses in the North of all shapes and sizes a stronger voice in shaping tax policy. The Government should consider new ways to work with businesses to ensure that they feel engaged and have the chance to steer policy in a way that will foster growth and investment in this critical segment of the economy.”

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