Expert Advice & Knowhow

Why small businesses think the government favours big businesses

XLN

Christian's view on why small businesses think it's one rule for them, and another for corporates

According to a recent survey by MarketInvoice, over three-quarters of small businesses feel that the government favours small businesses over big businesses.

And despite the positive steps the Chancellor made in the Budget – including the much-needed business rates cuts – a lot more needs be done to regain the trust of SMEs.

6 out of 10 multinationals paid no corporation tax in 2014

A Sunday Times investigation found that several British-based global giants, including Lloyds Banking Group and Shell, paid no corporation tax in 2014. That’s despite global profits of more than £30 billion. How many small businesses could have been saved or created with 20% of £30 billion?

Elsewhere, BP and GSK declined to reveal how much UK corporation tax they had paid, and HSBC paid a paltry amount given the scale of their profits. And all of this is just a taster; the list of tax-dodging corporations is vast.

So it’s little wonder small businesses think they’re getting a raw deal.

The battle for small business’ trust has only just begun

The 2016 Budget delivered some of what small businesses demanded. But to get them fully on side, George Osborne cannot afford to rest on his laurels.

The problem he faces is that corporate tax avoidance is front-page news. When a small business owner gets to work – another tough day ahead in which the margins between success and failure are narrow – that’s the news they’ll see in the newspaper. So the Chancellor needs to start making some headlines for the right reasons.

If he’s to take on big businesses, he can’t cut deals and make hollow promises. Small businesses didn’t see the Google tax deal as a victory – if anything, they saw it as a defeat. Could they cut a deal if they didn’t want to pay their share of tax? Not in a million years. They’d go out of business, and become nothing more than another statistic.

The Panama Papers leak adds fuel to the fire

The scale and detail of the Panama Papers leak is still emerging. The individuals involved may not turn out to have any affiliation to major British businesses, although it would hardly be surprising. But actually, for the small business owner, and for the wider British public, the details don’t matter.

What matters is that the Panama Papers leak is a huge story, and it fits neatly into a wider narrative of ‘us’ and ‘them’. The ‘us’ is the ordinary British person – most of the time simply trying to make ends meet. And the ‘them’ is a world of elaborate tax avoidance that’s impossible to relate to, and even harder to understand.

This narrative is endemic among small British businesses, and the government will have to take big, bold steps into unchartered territory if it wants to reverse it.