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Small firms hit by government stealth tax
The flat rate VAT charged by HMRC to small companies has risen in just under half of all business sectors, according to data released by the Federation of Small Businesses (FSB).
Flat rate VAT is charged to the smallest businesses with a turnover of less than £150,000 and aims to minimise the red tape around administering VAT.
“When VAT was lowered in December 2008 many rates stayed the same and some were reduced by up to 2.5%. What has become apparent is that after VAT was put back to 17.5% in January this year, nearly half of the flat rate schemes have seen the VAT level rise above the pre-decrease level,” said John Wright, National Chairman of FSB.
“While a few sectors have seen a decrease, the majority of businesses will see their rates rise, which is unacceptable at a time when cash-flow is limited. The FSB believes that this is a stealth tax, which will affect a firm's overall profitability.”
Post Date: March 4th, 2010
Flat rate VAT is charged to the smallest businesses with a turnover of less than £150,000 and aims to minimise the red tape around administering VAT.
“When VAT was lowered in December 2008 many rates stayed the same and some were reduced by up to 2.5%. What has become apparent is that after VAT was put back to 17.5% in January this year, nearly half of the flat rate schemes have seen the VAT level rise above the pre-decrease level,” said John Wright, National Chairman of FSB.
“While a few sectors have seen a decrease, the majority of businesses will see their rates rise, which is unacceptable at a time when cash-flow is limited. The FSB believes that this is a stealth tax, which will affect a firm's overall profitability.”
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Post Date: March 4th, 2010
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