PCG, the membership organisation for independent professionals, has called for an end to the disparity between how small and big businesses are treated when it comes to payment and taxation.

Recent research by Syscap has highlighted the struggle small businesses face due to the shift towards taxing firms through VAT rather than through corporation tax. A struggle that is exacerbated by the lack of similarly tight rules for their larger clients when it comes to paying on time.Simon McVicker, Director of Policy and Public Affairs at PCG, said:“Small businesses are forced by HMRC to comply with extremely strict rules when it comes to paying VAT at the point of invoicing, but there are no similar rules for big businesses when it comes to paying for services rendered.“Being forced to pay VAT before receiving payment from the client immediately puts small businesses in a tight spot.  This is exacerbated by the lack of control around bigger businesses paying late. It is one rule for big business and another for the smallest.“The issue of late payment needs to be at the top of the political agenda, especially when small businesses are being put under so much added pressure. The Government’s Prompt Payment Scheme is a step in the right direction, but in its current, voluntary form it is completely ineffectual.

 “If HMRC effectively wants to use small businesses as front line tax collectors, the Prompt Payment Scheme must be compulsory for all large organisations, including those in the public sector.“The current situation is seeing small businesses squeezed from all sides for money. If we want them to thrive, we need to stop using them as an easy source of credit for big business who withhold payment for months at a time and start giving them the fair and equal standing they deserve.”