UK business unaware of tax penalties
A majority of UK businesses are unaware of the large penalties that can be accrued by filing late or incorrect tax returns, new research has found.
Data from Tenon Forum has found that some two-thirds of British businesses are ignorant of the tax penalties they could be liable to pay. The report stated there was a "high level of ignorance" which is providing Her Majesty's Revenue & Customs HRMC with a "significant revenue stream".
Nick Parker, Tenon Forum's director of tax, commented: "Even though it may seem like more red tape, ensuring compliance with tax deadlines is a simple way for entrepreneurs to avoid additional, unnecessary expenses as they continue to grow their businesses.
"Start-ups and smaller businesses are playing a dangerous game if they aren't fully aware of the strict deadlines and penalties set down by HMRC. For one thing, they could seriously interrupt cashflow at a crucial point of growth."
The business advisory group has estimated that in 2004/05 alone, penalties for the late return of personal tax self-assessment forms netted HRMC just under £40 million.
Interestingly, business managers in charge of companies with a £20 million plus turnover were classed as particularly ignorant when it came to awareness of tax return fines.
A new poll has found that the majority of multi-national companies MNCs are aware of the significant benefits to be had through the adoption of a clear tax strategy.
A survey of tax directors at MNCs by PricewaterhouseCoopers PwC has found that 76 per cent claim to have, or are working towards the adoption of a clear tax strategy for their business.
The poll of directors at the PwC Global Tax Symposium also found that a company's mix of stakeolders is critical in deciding how much risk is permissable in its tax dealings, with such considerations an important factor in 84 per cent of cases.
Indeed, shareholders, investors and owners were cited by 71 per cent of tax directors as among the most influential groups of stakeholders.
Angus Johnston, a tax partner at PwC LLP, said: "Greater emphasis is being placed on tax directors to articulate appropriate tax strategies for their businesses, design appropriate controls and identify areas of risk and how to manage them."
Almost two-thirds of tax directors claim to spend the majority of their time on compliance and accounting issues.
About the Author: Jake Reinders of Consultant Technologies has provided IT contractors in the UK with administrative service solutions beyond those of a typical umbrella company. Please visit http://www.consultant-tech.co.uk for more information.