Taxation is main threat to recovery, survey shows

THE region’s SMEs are optimistic about the year ahead with almost two thirds predicting an increase in sales, but optimism is tempered by concerns over a perceived high level of business taxation.

According to the Owner-Managed Business (OMB) survey from accountants and business advisors Baker Tilly, reducing the cost and complexity of taxation, including corporation tax, national insurance contributions and VAT, has been identified as the main priority for the next Government as it looks to help businesses survive and grow post-recession.

Owner-managers are more optimistic about business prospects than this time last year, the survey suggests.

While last year’s OMB survey showed that only 19% of businesses in the region predicted sales would increase, this year’s survey reveals this figure has increased to 61%, an indicator of consensus that the worst of the recession is over.

The survey of 200 board directors of companies across all industry sectors with a turnover of up to £50m reveals that 89% see the tax burden as a threat to growth, 67% see tax complexity as a threat to growth, 72% anticipate an increase in operating profits over the next 12 months, and 50% of businesses reported that access to credit was still a threat to growth.

Richard King, office managing partner at Baker Tilly in West Yorkshire, said:
“The incoming government will have to balance the sibling rivals of tax and spend – an area which our research shows businesses to be clearly concerned about. The new government needs to be aware of the extra sensitivity surrounding the taxation of small and medium-sized companies as they gear up to help pull the country out of recession.”

He added: “Despite the precarious state of the public finances, each party’s manifesto commitments on tax play down the prospect of tax increases. Experience suggests that businesses are right to be concerned as the post-election policies rarely match the pre-election rhetoric.”