A SURVEY has found that East Anglia's small firms are the most confident in the country when it comes to a visit from HM Revenue & Customs.

A SURVEY has found that East Anglia's small firms the most confident about a visit from the tax man.

With HM Revenue & Customs' extended powers now in place, which include the right to enter business owner's homes, the study shows that the region's small businesses in East Anglia are the most confident about being investigated.

The survey, by Premierline Direct, revealed that only 8% of the region's firms were fearful of a visit from the tax man - half the national average.

It found 14% of entrepreneurs felt the threat of an investigation was more stressful than moving house, while 17% thought it was more stressful than starting up the business and 13% said the worry causes sleepless nights.

The poll, which showed that the new inspection powers will add to the pressure business owners are under, found that of the 30% of small businesses in the region that have experienced an investigation, nearly half (40%) said it was very disruptive to their business, 30% said it wasted a lot of time and one in ten found it difficult to concentrate on managing their company during the process.

According to the research, businesses in the north east were the most concerned about being investigated, with 45% fearful of a visit from HM Revenue & Customs, double the national average.

The study also found that female entrepreneurs don't find a tax inspection as troublesome as their male counterparts; with 28% of women saying it was disruptive, compared to 53% of men, and 25% said time was wasted compared to 37% of men.

As part of the new powers, which came into force on April 1, 2009, HM Revenue & Customs has the right to enter the homes of the thousands of business people and sole traders who claim expenses for “use of home as an office” to inspect their business records. This power includes visits to any business premises, including any part of a residential home used as an office.

Less than a quarter (23%) of small to medium sized enterprises in East Anglia have commercial or legal protection insurance, which would cover the legal expenses in the event of a dispute. Over a third (35%) would have to pay for advice out of personal savings, a quarter would have to use business savings and 18% would rely on profits.

Chris Little, managing director of Premierline Direct, warned that the cost of investigation for a small firm could be as much as �5,000, and pointed out that legal insurance cover could avoid this.

“HM Revenue & Customs is putting an increasing amount of resource into compliance in the SME sector. Dealing with a HMRC investigation can be disruptive, a distraction from running a business as well as costly,” he said.