In its budget submission this week, the Federation of Small Businesses (FSB) has raised concerns about government policy for small businesses, particularly its inspection and tax policies.

FSB, the UK's largest lobby group with over 195,000 members, believes that government inspections can be intrusive and costly for small firms and that the compliance burden is disproportionately heavy compared to the amount raised by the government.

The federation believes that Her Majesty's Revenue and Customs needs to review the risk assessment process for small businesses.

It has also called on the chancellor to avoid making further amendments to existing legislation therefore enabling a simpler and clearer tax system.

Neil Hamper, FSB's national chairman, added that small firms comprise 99 per cent of all UK business and contribute half of its gross domestic product.

"The best way for the chancellor to achieve his policy objectives is to work with small firms to create a beneficial businesses climate encouraging growth and entrepreneurship," he said.

The FSB's budget submission also proposed that the government keep the National Minimum Wage to the rate of inflation in the future, increase long-term investment in the road network and avoid using National Insurance as a method of taxation.

It also suggested the introduction of a zero rate VAT trading scheme, whereby VAT would only be charged at the final stage of consumption.

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