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A recent report has revealed that Small and Medium Enterprises look likely to waste £7.15 billion in 2012. Every one of the 4.5 million SMEs will pay an extra £1500 over the year. The Small Business Tax Action Report, which was produced by unbiased.co.uk outlines the reasons for the waste, while also categorising the areas of waste.

Tax experts have called for small businesses to seek professional advice after reading the report, eager for companies to prevent waste, especially as the UK faces a double dip recession. The number one reason for a business paying more tax is not making a company into a limited company or a limited liability partnership. This area alone accounts for £4.2 billion of tax which is unnecessary. The yearly report examines the ways that UK businesses waste tax, with surprising results.

Research and Development relief would save the nations businesses £373 million, while fully utilising self employed contractors would amount to a massive ££2.05 billion every year. The chief executive of Unbiased.co.uk. Karen Barrett said:

“Our Small Business Tax Action Report reveals that more than £7bn is being wasted by SMEs failing to take advantage of allowances and tax credits. The majority of this waste is down to businesses failing to understand what George Osborne calls the ‘spaghetti bowl’ of the UK tax relief system.”

Experts advise small businesses to outsource to low cost accountants in order to maximise allowances and tax reliefs. A number of small companies don’t have the resources to dedicate to minimising a tax bill.

 

 

 

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