smallbusiness.co.uk: Helping your business think big

As small firms brace themselves for today’s emergency Budget, the Federation of Small Businesses (FSB) warns that any increase in VAT must give SMEs chance to prepare.

The administrative cost of the previous change to VAT came to £1,500 per small business, claims the body.

John Walker, national chairman of the FSB, says: ‘Small businesses do not have the financial buffers to absorb increases in VAT as big business does, so it is imperative they are given time to plan. If the government truly is a low-tax administration, it must include a sunset clause, which would put a time limit of the length of time VAT is increased.

‘Small firms must not bear the brunt of tax rises and the emergency Budget must provide hope for the future, not more gloom.’

The body also urges that any rise in VAT should be tempered by lower rates in some sectors, such as a five per cent reduction on construction to stimulate growth. ‘The construction industry accounts for 10 per cent of Britain's GDP and so it is essential to the economy that this vital sector is supported through the recovery,’ said the FSB.

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