Business Taxation Survey 2018: West Midlands Regional Data Pt2

Greater Birmingham Chambers of Commerce

From the 11 to 25 April 2018, the British Chambers of Commerce conducted their 2018 Business Taxation Survey.

The survey focused on four key areas for businesses’, recording their views on: the admin/compliance burdens of business taxes, the impact of corporation tax and business rates, satisfaction of HMRC & awareness/preparation for Making Tax Digital and general business conditions (cash flow, investment and access to finance).

With this in mind, the GBCC has taken a closer look at the West Midlands regional data, summarising the four key areas. This blog post is the second part of our analysis of the results which will focus on HMRC, Making Tax Digital and general business conditions.

Satisfaction of HMRC and awareness/preparation for Making Tax Digital

  • 31% of businesses have made no preparations for ‘Making Tax Digital’.
  • 16% of businesses not satisfied at all with the overall level of service offered by HMRC

When asked if their business would rely more or less on digital accounting software to record and calculate tax over the next year, nearly a third (31%) of respondents stated that they would rely on it slightly more, with 17% choosing significantly more. In comparison, only 1% said they would rely on digital accounting software slightly less. Not a single respondent answered that they would rely on it significantly less. A significant proportion of those surveyed commented that there would be no change.

Respondents were then asked how much they knew regarding the HMRC initiative ‘Making Tax Digital’. Less than one in three (27%) claimed that they had never heard of the initiative, in comparison to 10% who answered that they knew a lot of details. Nearly a quarter (24%) of those surveyed said that that they knew the name only, with two in five answering that they knew some details.

The majority of businesses (51%) revealed that they were speaking to an accountant in preparation for ‘Making Tax Digital’. The next most popular option was ‘speaking with your accounting software provider’ (20%), followed by ‘collecting information and resources from other sources’ (13%) and ‘speaking to a tax/VAT advisor’ (11%).  Only 8% had actually contacted HMRC for advice, with 3% having spoken to a trade body in preparation.  Nearly one in three (31%) had made no preparations for ‘Making Tax Digital’.

In terms of the overall level of service, help and support their business receives from HMRC, only 8% were completely satisfied awarding a five out of five. In comparison, 16% were not at all satisfied with the overall level of service, awarding a rating of one. Nearly one in three (32%) rated the overall service a three which was the most popular score.

A significant number of respondents (60%) stated that their business had not received a HMRC compliance or Desk Audit visit in the last five years.  

The ‘Making Tax Digital’ initiative will see the creation of a modern tax system based on digital technology. From April 2019, legislation will require businesses above the VAT threshold to set up a digital tax account and file quarterly returns online. The GBCC would encourage businesses to start making their preparations now to ensure as smooth a transition as possible. If you would like further information on HMRC’s ‘Making Tax Digital’ initiative click here

General Business Conditions (cash flow, investment, access to finance)

  • 42% would like to see changes to Corporation Tax in the Autumn Budget
  • 59% planning to invest in staff training over the next 12 months
  • 56% of businesses have not attempted to access finance over the last 12 months

The tax that businesses’ would most like to see changes to in the Autumn Budget is Corporation Tax (42%), followed by NI contributions for employers (36%) and business rates (35%). More than a quarter of respondents (26%) felt that the Chancellor should take action on VAT and Dividend tax respectively. Only 9% would like to see urgent action on the Apprenticeship Levy and just 8% favour reforms to Capital Gains tax.                     

Nearly half (46%) reported that their cash flow has been fairly strong over the last twelve months, with 9% answering very strong. Around one in three (32%) respondents claimed that their businesses’ cash flow had been ‘fairly weak’ in comparison to 11% who felt it had been very weak.  

When asked what their business was planning to invest in over the next 12 months, more than half answered staff training (59%) and ‘market or advertising’ (51%). The next most popular answers were recruitment (43%), ‘IT/software and/or data security’ (43%) and ‘Capital equipment/vehicles’ (32%). Only a small proportion of businesses selected ‘automation or new processes’ (18%), land or premises (12%) and acquisition (6%).  Less than one in five (15%) answered that they were not planning to invest in the next twelve months. 

Finally, respondents were asked if they had attempted to access (either successfully or unsuccessfully) finance over the last 12 months. The majority (56%) had not attempted to access finance over the last 12 months. Of those who had, 18% sought to increase their overdraft and 15% had attempted to access a business loan (longer than 12 months). They were then asked why they had attempted to gain access to finance, with more than half citing cash flow (52%) and investment and growth (57%).       

Interested in finding out more about the performance of the Greater Birmingham business community? Then why not join us for our next Quarterly Business Report Q2 Briefing Breakfast on the 18th July at Birmingham City University. This high quality event will launch the QBR Report (Q2), which is our flagship economic publication and the most comprehensive regular report of its kind in the city region. Click here for further information.