3 in 5 UK Businesses Avoid International Expansion Due to US Sales Tax Complexity

• 60% of UK businesses have decided not to expand into the US because of sales tax complexity
• While 80% of UK business leaders believe that tax complexity is one of the greatest burdens facing their organisation.
• This ongoing tax complexity struggle for UK businesses comes on the eve of the 250th anniversary of the Boston Tea Party, where the transatlantic relationship between Britain and the US came to a head over the taxation of tea.

Avalara, Inc., a leading provider of cloud-based tax compliance automation for businesses of all sizes, today released findings from a new survey* of UK-based businesses around the complexity of US sales tax. The survey found that sales tax complexity is hampering British businesses expanding into the US, with 60% of UK business leaders deciding not to expand into a new market or sell a new product in the US due to the complexity of dealing with additional compliance.

“International sales tax complexity continues to stump UK businesses and is causing many to hold on plans to sell their goods and services into the US, which is hurting the economy on both sides of the pond,” said Alex Baulf, Vice President of Global Indirect Tax at Avalara. “Thankfully there is a solution that does not involve throwing tea or other goods into the Thames.  UK businesses can save time and money by turning to automated tax and compliance solutions like Avalara that are designed to streamline tax calculations, tax filing, and tax record management – removing international sales tax complexities and freeing up time for growth and expansion.”

Sales tax is curbing UK business growth

The 16th of December marks 250 years since the Boston Tea Party took place, where the transatlantic relationship between Britain and the US came to a head over the taxation of tea. Hundreds of years later, sales tax complexity continues to put a strain on UK businesses expanding operations to the US. In fact,  65% of UK tea merchants reveal that — in a post-Brexit environment — US sales tax is harder to navigate than selling into Europe. This is despite 9 in 10 UK business leaders seeing the US as a key market for their operations.

Complexity is costing UK businesses time and money

Failing to keep up with the complexity of sales tax, over a third (36%) of UK business leaders have faced fines or penalties due to unintentional non-compliance with sales tax obligations. As a result, a third (33%) have paid up to £1,000 in fines in the last 12 months.

Tax complexity as a whole is costing businesses time. Over a third (35%) of UK business leaders spend up to 10 hours per month on tax compliance on average. As a result, 8 in 10 (83%) UK business leaders argue that sales tax complexity has become one of the greatest burdens facing their business. In fact, three quarters (76%) of UK business leaders reveal that staying compliant with sales tax makes them anxious.

To help businesses calculate their sales tax and shoulder the administrative burden of staying compliant, 77% of UK business leaders say they’d lean on technology, such as AI, to reduce sales tax and cross border tax complexity.

To learn more about the impact of sales tax complexity on UK businesses, please click here.

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About Avalara

Avalara makes tax compliance faster, easier, more accurate, and more reliable for 30,000+ business and government customers in over 90 countries. Tax compliance automation software solutions from Avalara leverage 1,200+ signed partner integrations across leading ecommerce, ERP, and other billing systems to power tax calculations, document management, tax return filing, and tax content access. Visit avalara.com to improve your compliance journey.

*Methodology

Research was conducted by Censuswide by surveying 300 UK decision-makers in general businesses and retailers (in small to medium size companies i.e. up to 240 employees), who have a basic understanding of tax regulation and sell goods across the UK / globally between  Nov 9th – Nov 21st.

Research was conducted by Censuswide by surveying 102 UK decision-makers who say their company sells tea and sells products internationally between Nov 9th – Nov 21st.