Stuck in the middle

Medium-sized businesses (MSBs) punch well above their weight in the UK. They make up just 1.8% of businesses, but employ 16% of the UK workforce and generate 23% of private sector revenue. MSBs are critical to the UK’s future growth. It’s time for the tax system to get plugged into the ‘M’ agenda.

We believe that with the right support, this forgotten army of firms has the potential to play an even greater role in our economy.

The CBI has worked with the government to introduce dedicated trade missions for MSBs, and supported their efforts to knock down barriers on access to finance so they have the right patient capital to grow.

The tax system has a role to play in all of the big-picture challenges facing MSBs:

• Generating confidence and ambition
• Building up new skills and competencies
• Plugging the finance gap.

But right now the tax system is acting as a brake on the very firms we want to be driving the economy forward. This new CBI report sets out the steps government needs to take to address the tax barriers facing MSBs:

Improve cashflow by reducing the number of MSBs caught within the corporation tax advanced payment system by raising the threshold for making quarterly payments from £1.5m to £5m
• Free up management time and reduce outside compliance fees by giving MSBs a named HM Revenue & Customs (HMRC) contact for enquiries (‘CRM lite’)
• Support MSB export ambitions through radically simplified transfer pricing and transfer of assets rules.