HMRC holding back Entrepreneurs
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The slowness of HMRC is holding back entrepreneurs.
Many start-up businesses and small companies have been left frustrated when trying to take advantage of the tax incentive schemes designed to support these very businesses.
According to new data, many people have found trying to contact HMRC "very difficult" and in some cases delays in receiving the tax credits meant firms could not pay their bills on time. HMRC said "the overwhelming majority" of all valid claims were paid on time.
All fingers point towards an urgent review to deal with the ongoing issues.
Certain tax reliefs such as R&D (research and development) tax credits are seen as a key area of funding to help boost businesses who invest in innovation, but it hasn't quite fulfilled it's promise of late.
In particular, we have claims that state these issues are hitting female-founded companies the hardest because they currently only receive 2% of venture capital in the UK.
The number of firms on the brink of collapse jumped by more than a quarter at the end of 2023, according to insolvency specialist. It further found that just over 47,000 companies were in critical financial distress in the final quarter of 2023. Close to the same numbers of the financial crisis in 2009.
Prime Minister Rishi Sunak has promised to speed up the UK's economic growth amid flat GDP figures, and boosting entrepreneurship is one way to do this.
Last year HMRC struggled to keep up with the demand for support on the telephone with claims and enquiries. They encouraged people towards their online services but it's evident that people still need that human involvement. The under staffing caused unacceptable delays and hindered economic activity.
One reason for this is that R&D tax relief has been abused by some companies and HMRC had to tighten up its procedures. Unfortunately, the process has been slow for a while and we now have HMRC's busiest time of the year on the horizon with the strong possibility of them closing the telephone lines during this period.
Start-ups rely on these schemes to stay afloat, so these absurd delays can be critical for many businesses. They off a lifeline with things like cash flow, without these funds some companies will go bust or not be able to pay their bills. If HMRC doesn't deal with the ongoing pressures and fulfill the worthy claims in a more reasonable time, we will see a decline in small businesses getting off the ground and it will be less attractive for angel investors to get involved.