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FSB calls for VAT review

THE FSB has urged the Chancellor to review this week’s VAT increase in a bid to reduce the standard rate back to the original 17.5%.

This follows a survey conducted by the organisation which revealed that more than 70 per cent of small businesses expect yesterday’s VAT rise to have a negative impact on their business.

In addition, a further 52 per cent expect to increase prices, 45 per cent expect a fall in turnover, and 36 per cent expect a loss of customers as a result.

Despite George Osborne insisting that the 20 percent VAT is permanent, the FSB has asked for it to be reviewed in the future.

A Spokesperson for the FSB, said: “Small firms will be hit hard by the rise in VAT as unlike big businesses, they can’t absorb the increase.

“This will mean that small firms will have to pass the full cost on to customers, reduce stock levels or find cost savings elsewhere – potentially costing jobs and undermining the Governments private sector led recovery.”

The FSB has also called on the Government to increase the threshold at which small businesses begin to pay VAT, from the current rate of £70,000 to £90,000.

They believe this has the potential to create up to 35,000 jobs and help small businesses when they need it most.

John Walker, National Chairman, Federation of Small Businesses, said: “If the Government truly believes that the private sector is going to strengthen the recovery we need to see action.

“Increasing the threshold at which companies have to register for VAT will put almost £900 million back in the pockets of small businesses.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .