Many thriving medium-sized firms are getting a raw deal from the UK tax system due to 'administrative burdens,' says a Midland expert.
A key survey by the CBI and business adviser Grant Thornton found the medium-sized business (MSB) segment wass prospering and a key contributor to the UK economy.
It also has the potential to further drive business growth and job creation but companies are being held back by the UK tax regime, says the 'Stuck in the Middle' survey.
Research shows the tax system is acting as a brake on their growth, disrupting their cash flow, absorbing management time and dampening export ambitions.
MSBs do not have the resources that large companies have to navigate tax rules, nor do they receive the targeted support that the Government directs at small businesses.
The CBI and Grant Thornton are now calling on the Government to make a number of changes to the tax system, including improving cash flow, widening access to R&D tax relief and making it easier for MSBs to export.
Birmingham-based David Hillan, head of corporate tax at Grant Thornton in the West Midlands, said: "As the UK's economy continues to gather pace as we emerge from the recession, it is vital that all businesses do not face administrative burdens that impede their growth.
"This is especially true for MSBs. These organisations face particular challenges in coping with tax law.
"They are not so large that they can self-resource the skills needed to resolve complex tax legislation or to have the dedicated support that the HMRC CRM affords.
"Neither are they so small that many of the complexities highlighted in this report are not relevant to them.
"The MSB community often struggle to find a voice, yet when asked they have a lot to say, with tax complexity regularly cited as a major barrier to their growth."
John Cridland, CBI director-general, said: "Medium-sized businesses have the most potential to drive business growth and job creation.
"But all too often their resources, management time and ambitions are being sapped by a tax system which disproportionately hits firms of this size."
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