SMALL and medium-sized businesses are spending millions of pounds on unnecessary administration costs because of a government failure to reform taxes.

That is the claim made by Daron Hutt, chairman of Bournemouth-based telecoms company 4Com.

He said successive governments had failed to address widespread tax reform.

“There are thousands of businesses finding the current economic climate tremendously difficult and in some cases our outdated tax arrangement is final the nail in the coffin,” he said.

“It would be much better to simplify our tax systems, for instance to consolidate emp-loyers’ National Insurance con-tribution into PAYE.

“Companies would spend less time on administering employees’ tax, saving money that could be spent on gaining new business or retaining staff.”

He said SMEs were worse off than ever and the tax system made it difficult to grow.

“If, for instance, we look at the complexities of how corporation tax is administered, you have huge companies not paying taxes and smaller companies that don’t have the resources to get around the ‘tax loopholes’ that the larger corporations are using,” he said.

“SMEs can’t compete on level terms with the bigger companies. You end up with a mismatch in what should be a competitive marketplace. “Corporation tax is a bit of a strange instrument and it would be much better for everyone if the government just scrapped it and came up with a different style of taxation that was fairer for small to medium businesses.”

He said cutting administration costs would free up money so businesses could grow without so much borrowing or investing capital.

4Com, which Mr Hutt has built over the last 15 years, was recently named by the London Stock Exchange as one of the top 1,000 UK companies to inspire Britain.