Small businesses shrug off rise in VAT
by WIN Admin — published in Press Releases
MORE than half of small and medium sized firms reckon the recent VAT rise will not make any difference to their business.
Almost six out of 10 decision makers who took part in the YouGov SME Omnibus survey said they did not expect to be affected by the increase from 17.5% to 20%, which came into force on January 4.
London-based businesses were most confident, while those in the east of England were most pessimistic about the effects of the VAT rise. But the vast majority of businesses – 86% – said they had prepared themselves well for the increase.
Meanwhile, the Federation of Small Businesses (FSB) says that the sector ended 2010 feeling less confident than at the start of the year.
Its fourth quarterly Voice of Small Business Index pointed to a drop in the momentum of the private sector recovery. It highlighted issues such as constraints on cash-flow increased from utility bills, fuel duty and VAT.
These combined with public sector cuts are likely to cause 2011’s growth to be “sluggish” at best, the FSB said. It also pointed to the snowy weather at the end of the year and the VAT increase, which had especially hit the confidence of small service and consumer firms such as shops and the hospitality sector.
FSB chairman John Walker said: “A number of pressures on small businesses are beginning to come to a head, such as the increase in VAT and fuel duty, placing more strain on cash-flow.
“This combined with the severe weather at the end of 2010 has meant that small firms are not as confident about their prospects in 2011.
“With inflation above target and the labour market still weak, small firms cannot rely solely on the consumer for growth in 2011. So it is imperative the Bank of England base rate is kept at 0.5%.”
Source: Karen Dent, The Journal