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This publication is available at https://www.gov.uk/government/publications/supporting-mid-sized-business-maintaining-and-growing-uk-plc/supporting-mid-sized-business-maintaining-and-growing-uk-plc
There are approximately 170,000 mid-sized businesses and they play a vital role contributing to the UK economy, promoting entrepreneurship and creating new jobs.
Mid-sized businesses are defined as those that have a turnover of more than £10 million and/or more than 20 employees.
This document provides owners or directors of mid-sized businesses and those who advise them with information and an overview of the support HM Revenue and Customs (HMRC) provides.
2. Introduction from Jennie Granger
“As Director General for Customer Compliance in HMRC, my focus is on ensuring businesses and individuals pay the right tax at the right time. We want to help you get things right.
We know mid-sized businesses are a diverse population and that through better tailored services we can support your needs. As part of HMRC’s digital modernisation we will be able to provide increasingly responsive tailored services to you and to your tax advisers and agents. These changes will make it easier for you to get answers to your questions and help you make sure you are getting it right first time.
You told us you find it hard to navigate the wealth of pages available on GOV.UK to find the information that is relevant to your business. Based on your feedback, we have created a page which signposts you to the relevant guidance available on GOV.UK.
Mid-sized business have significant potential to grow and some will go through intense periods of change. From June this year we will offer these businesses a named contact who will work with you as you go through these growth events, providing you with necessary support to get your tax right.
We recognise there is more to do to improve your experiences of dealing with us. One of the ways we are doing this is by expanding our online and digital services, many of which can be accessed from any device, anywhere at your convenience. The services include webinars, YouTube videos on a range of topics, iForms and HMRC’s social media channels.
We will continue to work with a variety of stakeholders that represent your interests to help shape the future of our service offer.
I hope you will find this publication useful to learn more about the help and support that is available to pay the right tax, grow your business and succeed. “
Jennie Granger, Director General, Customer Compliance
3. What HMRC is doing to support mid-sized businesses
In 2014, HMRC set up the Mid-Sized Business customer team. This team is focused specifically on mid-sized businesses, and allows us to provide a tailored service to this section of the UK business population.
The Mid-Sized Business team is here to:
- help you locate the right guidance
- support growing businesses
- efficiently promote and administer incentives and reliefs
- improve compliance and tackle avoidance and evasion
3.1 Customer service
HMRC has significantly improved our front line services to you by investing in 800 additional staff. We are now delivering an improved telephone service, consistently answering 90% of calls with an average speed of answer under 5 minutes (April 2016 to October 2016) and are looking at ways to improve further.
In response to an Office of Tax Simplification recommendation, we will be offering longer opening hours and a 7-day a week service on tax and tax credit phone lines and web chat.
We now also offer you alternative ways of contacting us, such as social media.
3.2 Mid-sized Customer Engagement team
Mid-Sized Businesses (MSBs) are a diverse population ranging from complex groups of companies to relatively simple organisations. To support the range of issues these businesses face we have established a Customer Engagement team.
To find the answers to your queries you need to access our online guidance in the first instance. Only if you are unable to resolve your query through this route or over the phone, you should contact the Customer Engagement team.
3.3 Business Tax Account
We have made significant progress in building a more digital tax system with the Business Tax Account. Businesses can register, file and pay online, view their taxes in one place as well as access a wealth of digital help and support.
The account is personalised to you as the business user which means you have a tailored service making it easy for you to see what you need to do and when. The account also enables you to access help and support relevant to your customers.
3.4 Tools for agents
Tax agents play an important role in supporting many MSBs to get their tax right. In addition to providing you with a wide range of help and support, we also provide tailored help and support to agents:
- Agents Working Together has now moved to an online function, providing agents with the opportunity to ask HMRC questions, share thoughts and obtain information without having to leave their offices
- Agent Update provides regular updates, news and guidance from HMRC and can be accessed via the link or can be subscribed to
- Talking Points are weekly online meetings that provide agents with the opportunity to discuss a range of subjects with HMRC experts
- Tax Agent Toolkits have been designed to help tax agents and advisers avoid errors in their clients’ returns - new agents receive notification of the toolkit when they first register with HMRC
3.5 Tax reliefs
MSBs are often considered the engines of growth in the UK economy and include some of the fastest growing businesses. There are a range of tax reliefs and incentives available to help businesses grow and prosper. We are making it easier for you to identify and access these reliefs and incentives.
We are working to provide a new online system in 2017 to make it easier to access the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and the Venture Capital Trust Scheme (VCT). These schemes encourage investment in smaller, early stage unquoted trading companies, by providing income tax and capital gains tax reliefs to individual investors. The EIS and VCT schemes allow qualifying companies with fewer than 250 employees to receive investments of up to £5 million a year, up to £12 million in total. The SEIS allows companies with fewer than 25 employees to receive investments up to £150,000 within 2 years of starting up.
We recognise that processing applications promptly and professionally can be critical to investment deals and future funding of companies. We have just concluded a consultation period on the advance assurance service offered in respect of these reliefs. The consultation sought views on streamlining the service in order to ensure we deliver a prompt and professional service.
Businesses’ owners thinking of selling or disposing of a business may be able to claim Entrepreneurs’ Relief. Changes to the relief mean that since April 2016 Capital Gains Tax is charged at a single rate of 10% rather than at 10% or 20%, depending on your circumstances.
Since January 2016 the Annual Investment Allowance has been permanently set at £200,000, supporting businesses investing in new plant or machinery and growth by providing a 100% allowance for the full cost of qualifying plant and machinery in the year of purchase.
There are a range of Research and Development (R&D) reliefs which enable you to claim reliefs on corporate tax profits for qualifying activity. In 2015 to 2016 over £1 billion of tax relief support was provided to around 40,000 business. We aim to pay tax credits within 28 days to ensure businesses receive the support when they need it most. To improve certainty for businesses, in 2015 we introduced an advance assurance scheme for small companies making their first claim.
Creative Tax Reliefs encompass a suite of reliefs available to film, high-end TV, children’s TV, animation, theatre and orchestral production companies and video games development companies. Qualifying companies receive an additional deduction based on certain qualifying expenditure. In 2016 to 2017 the volume of claims have increased by just over 50% compared to 2015 to 2016 and we have already paid out over £550 million in tax reliefs.
In April 2017 an additional relief to target support for museums and galleries will be introduced.
Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned from their patented inventions. This means that for companies opting in, a tax rate of 10% will apply to profits from the exploitation of patents and similar intellectual property. We expect to approve £350 million of tax relief in 2016 to 2017.
The Employment Allowance has taken 680,000 employers (48% of all employers) out of employer National Insurance contributions (NICs) during 2015 and 2016. The allowance rose to £3,000 from April 2016 which will take a further 90,000 out of employer NICs.
Since April 2015 employees under-21 don’t attract employer NICs, and from April 2016 apprentices under 25 years of age are also exempt. This benefits businesses who now no longer have to pay these contributions and it encourages and enables them to employ more young staff. In turn this incentive raises the number of young people in employment and provides an overall boost to the economy.
4. Our offer to further support mid-sized business
In 2015, we conducted the first customer survey for mid-sized businesses, which now takes place annually. The survey showed what you considered most important when interacting with us:
- our ability to get tax transactions right
- our capacity to resolve your queries
- the time taken to resolve a query or issue
We are committed to improving the service we provide to mid-sized businesses by:
- establishing a customer forum specifically for mid-sized businesses, the first forum is planned for post Easter 2017
- launching a Named Contact service in June 2017, for businesses experiencing major growth related events such as mergers and acquisitions, international expansion etc
- making tax digital
- developing our understanding of businesses to support a level playing field
- improving published guidance on GOV.UK, in order to make it more useful and accessible
In addition we have commissioned a specific piece of research to better understand how we can support you to grow your business and the challenges and barriers you face.
4.1 Mid-sized customer forum
We are creating a new forum which will focus specifically on your needs, enabling us to learn more about how we can help and support mid-sized businesses.
The forum will:
- develop our insight and understanding of mid-sized business and the challenges you face
- develop new ideas and test approaches to address these challenges
- share the latest developments affecting mid-sized businesses, as part of our ongoing transformation
The forum will comprise of some mid-sized businesses, senior representatives from HMRC, The Confederation of Business Industry (CBI) and Other Government Departments (OGDs).
Meeting face to face with businesses and listening to your concerns and challenges will help us to explore how we can improve our service and support as well as develop new policies and products.
4.2 Named Contact service through key growth events
In the 2015 customer survey, 25% of mid-sized businesses said they had experienced a major growth related event in the previous 12 months. 85% said they were planning growth activity of some sort in the next few years.
From June 2017 we will therefore be launching our Named Contact service to support growing mid-sized businesses. We are setting up this service to help those businesses who face growth related life-cycle events such as significant capital investment, mergers and acquisitions, starting to trade internationally or opening operations abroad. Businesses will be able to request the support of a Named Contact to help you get your tax right.
Your Named Contact will be a tax specialist who will discuss your needs and provide information and guidance tailored to your circumstances. They will support you through complex technical issues, and ensure access to the right technical guidance in HMRC where needed to help you work through tax issues you face.
The Named Contact should be your single route into HMRC during your period of growth, co-ordinating your dealings with HMRC, saving time and cutting down on administrative burden for both you and HMRC. If you believe this is something your business could benefit from, you will be able to find more information and request the service on GOV.UK from June 2017.
4.3 Making Tax Digital
Making Tax Digital (MTD) is the next phase of HMRC’s digital journey and represents a step change in the way businesses interact with the tax system. MTD will integrate tax into day-to-day business processes. This will facilitate easier and more regular (quarterly) transfer of information between businesses and HMRC, providing you with a more real-time view of your tax position and giving you the confidence and certainty that you have got things right.
We are also working with Companies House to deliver improvements to company registration by May 2017. This change means that if you are setting up a new company, you won’t have to enter your data more than once when you incorporate and register for Corporation Tax, PAYE and VAT. The new Register Your Company service will also include improvements, making the service easier to use and reducing the time it takes you to complete the process.
4.4 Managing compliance across mid-sized businesses
We are committed to ensuring a level playing field for all business to enable fair competition. To ensure this we undertake a wide range of compliance activity into mid-sized businesses ranging from helping you to avoid making mistakes to targeting those businesses who choose to avoid or evade paying the tax due. Our activities include:
- prompting businesses and reminding them of their obligations, for example information on frequent errors or due dates
- answering queries relating to specific transactions and events
- assuring compliance for VAT, PAYE and National Insurance or other duties specific to a trade sector, this could be in the form of telephone interviews or visiting business premises
- more extensive enquiries into a business, its accounting systems and its tax strategy
- detailed investigation of any tax avoidance
- a full review of accounting and tax records across the business and its owners for all taxes and duties where we consider there to be a significant compliance risk
Whilst we will always aim to work collaboratively with businesses to resolve issues, we are not always able to give specific reasons for our compliance activities, which form part of our wider work to protect the integrity of the tax system.
We hope you have found this information helpful to you and your business. HMRC are committed to continually reviewing and improving the service that we offer to our customers.