Britain's small businesses are spending almost £25billion a year navigating tax red tape, according to new research.
The Federation of Small Businesses (FSB) has warned the more and more complex tax system in the UK, coupled with poor service from HMRC, has led to small scale firms spending £4,500 per year just to comply with the rules.
According to the FSB, The Telegraph reports, lengthy forms and slow phone queues are having a negative impact on productivity and investment levels at small companies.
Representing five-and-a-half million small businesses across the UK, the FSB is calling for improvement to HMRC's customer service to save firms time and money.
HMRC data shows the average time on hold has risen dramatically in the past 10 years, from 4 minutes and 24 seconds in 2014/15 to 23 minutes and 14 seconds in 2023/24.
FSB policy chair Tina McKenzie said: “This is money and time that could be far, far better spent on building up their business, and the overall cost to the economy in terms of lost growth and wasted productivity is enormous.
“Given the challenges facing the economy, and the need for growth, reducing the burden placed on small firms by tax compliance must be a priority – something the government has recognised as a priority for other regulators. HMRC should be included in the government’s drive to make regulation better support growth.”
Chancellor Rachel Reeves has told more than a dozen regulators to slash red tape and barriers holding back economic growth - but has left HMRC off that list.
An HMRC spokesman told The Telegraph: “We are already improving and modernising the tax system to deliver the services our customers expect.
“The large majority of small businesses report a positive experience when dealing with us and Making Tax Digital is designed to slash the time spent on tax administration, giving self-employed taxpayers more time to grow their business.
“Overall customer satisfaction stands at around 80pc and the funding settlement we’ve received means we’ll be able to meet our service standards in 2025-26.”