Start-Up Firms Frustrated by HMRC’s ‘Slowness and Lack of Communication’
London – Start-up companies are expressing growing frustration with the slowness and lack of communication from Her Majesty’s Revenue and Customs (HMRC), the UK’s tax authority. This is particularly concerning for female-led start-ups, who face unique challenges in accessing tax incentive schemes designed to boost new businesses and innovation.
Delays in Tax Incentive Schemes
Sahar Hashemi, co-founder of Buy Women Built (BWB), a network of female entrepreneurs, emphasizes the increasing difficulties faced by female-led start-ups in accessing government incentives. These include R&D (research and development) tax credits and EIS (Enterprise Investment Scheme) tax relief.
R&D tax credits, introduced in 2000, provide support to SMEs investing in equipment for innovation. EIS, introduced in 1994, makes qualifying start-ups more attractive to investors by allowing shares to be purchased in a tax-efficient manner.
Impact on Female-Founded Companies
Ms. Hashemi highlights the disproportionate impact of these issues on female-founded companies, which receive only 2% of venture capital in the UK. The delays in processing tax credits can exacerbate cash flow problems, leading to difficulties in paying bills and hindering growth opportunities.
Economic Implications
The delays experienced by start-ups have significant economic implications. With the number of companies going bust reaching alarming levels, Prime Minister Rishi Sunak has emphasized the need to accelerate economic growth. Boosting entrepreneurship is seen as a key strategy to achieve this goal. However, the inefficiencies in HMRC’s processes are perceived as obstacles to economic growth and job creation.
HMRC’s Response
In response to the concerns raised, HMRC maintains that the overwhelming majority of valid claims are paid on time. The department emphasizes that public money is at stake and that claims are thoroughly scrutinized to ensure fairness.
Personal Experiences
Entrepreneurs have shared their personal experiences of dealing with HMRC. Anna Maxwell, CEO of consumer healthcare company Maxwellia, describes significant backlogs in reviewing R&D tax credit applications, leading to cash flow issues and delayed payments. Joanna Jensen, founder of Childs Farm skincare brand, recounts an eight-month wait for an EIS rebate, necessitating the involvement of her MP.
Conclusion
The issues raised by start-ups regarding HMRC’s slowness and lack of communication are a cause for concern. Delays and inefficiencies in HMRC’s processes hinder economic growth and entrepreneurship, particularly impacting female-led start-ups. It is imperative that these issues are addressed promptly to support the growth of new businesses and innovation in the UK.
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