n 25 August 2016 HMRC published the results of a survey of mid-sized businesses. This covers the types of business dealt with by HMRC’s Mid-Size Business Unit. These businesses are seen by HMRC as a distinct group owing to their contribution to the UK economy and their growth potential. For this purpose a mid-sized business is defined as a business with turnover above GBP 10 million and/or more than 20 employees.

Dealings with HMRC

Around 51% of mid-size businesses surveyed considered that their overall experience of dealing with HMRC over the previous twelve months was positive. Mid-size businesses that had only used digital channels were more likely to be positive about their overall experience than businesses using both digital and non-digital channels for contact with HMRC.

Businesses with significantly more employees were less positive about their overall experience of dealings with HMRC, only 34% of those with more than 250 employees reporting a positive experience. Businesses with fewer employees were more likely to be just using digital channels, and in general the survey concluded that digital-only users were more likely to have a positive view of HMRC than businesses that used both digital and non-digital channels.

56% of all the businesses surveyed reported that they found it easy to deal with their tax affairs, but for digital-only users this figure was higher at 73%.

Attitude to compliance

The survey asked businesses for their perceptions of attitudes towards tax avoidance among similar businesses. Around 66% of the businesses considered that tax avoidance was not very widespread among businesses similar to theirs. Most considered that tax avoidance was either always unacceptable (46%), or mostly unacceptable depending on the circumstances (31%). Around 56% of the businesses considered that those businesses that avoid tax will be challenged by HMRC. More than three quarters of the businesses surveyed considered that HMRC is dealing as firmly or more firmly with tax avoidance compared to a few years ago.

The survey appears to show that although there is no direct link between positive experience of relations with HMRC and positive views towards tax compliance there is a link between a lack of confidence in HMRC and less positive attitudes towards tax compliance.

Growth

The surveyed mid-sized businesses did not see HMRC as either a facilitator of growth or a barrier to growth. The businesses were more concerned with the UK and global economic climate; new leadership within the business; or barriers to growth such as difficulties in recruiting a skilled workforce; competition or financial regulations.

Awareness of policy changes

More than half the mid-sized businesses were aware of the reduction in corporation tax with 52% knowing something about it and 24% saying they had heard about it but did not know any more details. Around 33% of the businesses knew about the increase in the rates of research and development (R&D) tax credits; a further 16% had heard about this increase but did not know any more details. Awareness of the increase in the Annual Investment Allowance (AIA) was at similar levels. The businesses had generally been informed about the changes by their regular tax advisor (47%).

There was lower awareness of recent changes to VAT although businesses with an annual turnover of more than GBP 100 million had more knowledge of the VAT changes. It appears that the low awareness was mainly due to businesses not considering the changes were relevant to them.