Tax regime doesn’t encourage enterprise say private firms

HALF of private business owners surveyed in the North don’t believe that the UK’s tax regime supports and encourages enterprise despite reliefs and measures.

According to a PricewaterhouseCoopers (PwC) survey more than 80% of respondents feel that private firms need an effective voice with government with only 37% believing that they can making their concerns heard.

Only two in 10 think that the Government actually actions the concerns put to it by private enterprise.

The findings show a mixed picture in awareness levels of the different tax reliefs available to UK private businesses and in some instances awareness has declined since the survey was last published in 2007.

Nationally, the highest awareness levels of the 12 named schemes in the survey, known to more than eight in 10 companies were R&D tax credits, tax deductions for employee share scheme rewards and first year allowances for the acquisition of capital assets.

Environmental relief has a seen an increase in both awareness (66%) and usage (35%).

Arif Ahmad, partner and leader of Yorkshire entrepreneurs and private companies at PwC, said: “Private business is calling for a stable, certain tax environment in which to conduct their business successfully.

“Reducing tax rates would be a challenge in the current economic climate, but a reduction in the rate of change and uncertainty should be easier to deliver.”

He added that awareness over tax relief was “patchy” as a result of over complicated tax legislation, which left many companies believing they wouldn’t qualify.

Additionally, the survey found that nearly all respondents (99%) are seizing opportunities to support them through the recession with more than 50% of Northern firms confirming they have updated their strategies in the last three months.

Private businesses leaders shared a sense of confidence in their future despite the downturn, with more than two thirds (65.7%) agreeing that their business prospects are set to improve rather than decline over the next two years.

More than a third (41%) of companies confirmed that their respective business plans had been compromised by a lack of financing throughout the last 12 months.

However, 65% agree their business prospects were set to improve rather than decline over the next two years.

Mr Ahmad said: “While availability of lending has been an issue for many companies, over half do not feel that their business plans have been compromised by a lack of finance.

“Nearly all respondents are however focusing on liquidity to be in a position to take advantage of opportunities coming out of the recession.”

The report also found that more than half of private business leaders cite people and talent recruitment as an important recession emerging factor along with diversification of their customer base (76%).

However, while more than eight in 10 privately-owned companies have identified the key people in their organisation, only six in 10 are confident they have aligned their business strategy and their talent management strategy.