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A survey carried out by the Federation of Small Businesses (FSB) of over 1600 firms has revealed that around 75 per cent of small businesses believe that they would be able to grow their business if the UK tax system was simplified.

Over a third (34 per cent) of respondents cited income tax as the most difficult issue to deal with, while 52 per cent reported that taxable allowances are the most complex to manage. VAT was considered to be the simplest tax to deal with by 52 per cent of repsondents.

A half of firms spend less than two hours a week fulfilling their tax responsibilities, but for 10 per cent of firms it occupies more than six hours of their time.

John Wright, the FSB's national chairman, said: "The government must recognise how important small businesses are to strengthening economic recovery.

"As our survey findings show, three in four would grow their business if the tax system was more simple to understand. The potential investment and jobs which could be created through such a move would provide the economy with the boost it needs to sustain recovery."

With a general election looming, the FSB called on the incoming administration to "think small first and get conditions right for entrepreneurs and small businesses to thrive".