Research shows SMEs need assistance with small expenses
A Member of the UK200Group of independent accountancy and law firms has commented on new research which has found that UK freelancers and micro-businesses are missing out on millions of pounds worth of tax relief from unclaimed expenses.
The study carried out by FreeAgent, a cloud accounting software provider, has estimated that nearly £250m worth of expenses with individual values of £10 or less are being unclaimed by UK micro-business owners every year.
By using a sample of 2.5 million expenses worth a total of £168m logged by customers in FreeAgent throughout 2015, the company has found that the average micro-business owner has around £216 worth of expenses with individual values of £10 or less every year, with many more going unclaimed by other small business in the UK.
Jonathan Russell, partner at UK200Group member firm ReesRussell, said:
“FreeAgent’s study establishing that many small and micro businesses do not claim all their possible expenses may well be true, which is why many of these businesses could benefit from professional assistance, which is a business expense in its own right.
“However, experience shows me that many small businesses are unaware of what constitutes an allowable business expense and that many are more likely to claim a payment, which is not a valid expense or claim it in the wrong way than fail to claim.
“These incorrectly claimed expenses tend to be larger than those, which the inherent laziness in record keeping fails to record. Accounting software is a great way of recording transactions and capturing everything in a simple manner is the way to go but ultimately the businesses need professional help in establishing what amongst the items recorded are taxable or deductible.”