Autumn Budget 2017: An open letter to the Chancellor | KPMG | UK

Autumn Budget 2017: An open letter to the Chancellor

Autumn Budget 2017: An open letter to the Chancellor

Four out of five businesses say that tax is an opportunity to drive growth, according to research commissioned by KPMG. Mike Linter, Head of National Markets Tax, shares insights into the attitudes of small and medium sized businesses in an open letter addressed to Chancellor Philip Hammond.

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Autumn Budget 2017 - Open letter to the Chancellor

Dear Chancellor of the Exchequer,

Small and medium sized enterprises (SMEs) are the backbone of the UK economy. Their role in improving innovation and enterprise is crucial, as the UK adjusts to life outside of the European Union.  

A competitive and simple tax system will help SMEs to flourish in this new world.

As proud supporters of SME businesses, KPMG commissioned research to assess SME attitudes towards the UK tax system.  We surveyed over 700 leaders in businesses with annual revenues between £25 million and £300 million.  These innovative businesses spanned 11 business sectors - from manufacturing to media, hi-tech to healthcare - as well as the exciting new emerging industries that will shape the future UK economy.

The results are encouraging. 

71% of those surveyed said the UK tax system is designed to help SMEs succeed: creating growth, boosting employment and attracting investment.  Indeed, 59% of respondents believed that SMEs were being adequately considered in shaping the tax system. The role of SMEs in promoting, simplifying and consulting on tax policy is essential if the UK is to make the most of the growth potential SMEs offer.

The Growth Support Service is an important government intervention that gives mid-sized businesses the expert help they need to grow. When it comes to shaping tax policy, however, some SMEs feel they are being crowded out. Only 19% of the smallest businesses we surveyed (turnovers of between £25m-£49m) said the voice of their community is being heard, with 72% saying large multi-national corporations have influenced tax policy too much.  

When it comes to tax simplicity, we found that more than a third of businesses (38%) think tax rules are overly complicated. If this problem is solved, SMEs will have a better chance to take advantage of the incentives available to them. Concerns over complexity were split markedly by region, with the strongest concern found outside of the capital. SMEs in the South West (60%), the Midlands (47%), Yorkshire and North East (46%) and the North West (43%) said that the system is too complex. Less than a quarter (23%) in London felt the same. 

Different attitudes towards tax were discovered among different business sectors. An overwhelming majority of respondents in the automotive (86%), financial services (85%) and transportation (82%) sectors said they are making the most of the support available from the tax system. By contrast, under two thirds of retailers and only 41% of media and entertainment firms share their confidence.

As the government looks to create a more inclusive economy, we believe there is now a need to promote SMEs of all sizes into a bigger role in the policy process. Our research has unearthed opportunities that accelerate that process, and our conclusion is clear: the creation of a SME Tax Taskforce. 

The taskforce would formally consult with representatives from SMEs, government, industry associations, regional leaders, and professional services to develop tax policy in a post-Brexit Britain, identifying effective ways to raise awareness and understanding of the opportunities provided by the tax system.

We stand at a critical juncture in preparing for our new life outside of the European Union. It is more important than ever that the government uses this opportunity to unleash the potential of our SME community. At KPMG, we are committed to supporting the government in delivering this potential.

We know that SMEs are the engine for enterprise and growth across the UK. 

We hope that others from the across the business world will add their weight, experience and expertise to this vital initiative, and make that engine roar.

Yours sincerely,

Mike Linter

Head of National Markets Tax, KPMG

 

CC     Mel Stride

          Margot James

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