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Small businesses fear VAT rise

According to a survey of 1,600 business owners by the Federation of Small Businesses, 71 per cent think the VAT rise will be detrimental to them. 52 per cent expect to increase prices, 45 per cent forecast a fall in turnover, and 36 per cent expect a loss of customers.

The FSB is campaigning for the government to help alleviate the stress on small firms’ cash flow by increasing the threshold at which they begin to pay VAT, from the current level of £70,000 to £90,000.

John Walker, national chairman of the organisation, says, ‘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. Without this small firms will struggle to bounce back as the spending cuts start to bite.’

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