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SMALL FIRMS CALL
FOR HIGHER VAT THRESHOLD |
The UK job market could benefit from up to
35,000 additional positions if the point at which small
firms begin to pay VAT was increased by £20,000, according
to the Federation of Small Businesses (FSB).
Raising the threshold to £90,000, from the current
£70,000, could save up to £162 million per year through a
reduction in red tape associated with VAT compliance, as
well as saving just over £700 million in payments, an FSB-commissioned
report by the Centre for Economics and Business Research (CEBR)
shows.
The savings could be used to create up to 35,000 jobs on an
average wage, said the federation, claiming that the loss to
the Treasury in VAT receipts would be more than offset by
the potential £13 billion that will come from the increase
in VAT to 20%.
Small firms will be hit hard by the rise of 2.5 percentage
points in January because they will not be able to absorb
the increase and will have to pass the full cost on to
customers, reduce stock levels, or find cost savings
elsewhere possibly by axing jobs said the FSB.
The organisations national chairman, John Walker, stressed
the need for national programme for growth for small firms
as 10.4% of firms expect to reduce their staffing levels
over the final quarter of the year, according to the CEBR
report.
The smaller the business, the higher the cost of VAT
compliance; this is why the FSB is calling for the
Government to increase the threshold at which a business
must register for VAT, said Mr. Walker.
If the Government is truly committed to a private
sector-led recovery then it must implement a small business
programme for growth, to allow firms to grow and invest.
For advice on YOUR VAT situation, and how
to keep proper records, contact us Here
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