According to a report from the Centre for Economics and Business Research commissioned by the FSB, raising the VAT registration threshold from its current level of £70,000 to £90,000 could save small businesses up to £162 million a year by cutting the red tape around VAT compliance, together with another £700 million in VAT bills.
Those extra millions could be used to create up to 35,000 jobs on an average wage, says the FSB, creating income tax revenue that – taken with the extra cash generated by the 4 January VAT rise to 20 per cent – would more than compensate for any loss in VAT receipts to the government from raising the registration threshold.
John Walker, FSB chairman, says that small firms will be hardest hit by the January VAT rise because they’re less likely to be able to absorb the increase, meaning that they have to pass it on to customers, cut stock levels or find savings elsewhere.
He says: "If the Government is truly committed to a private-sector led recovery, then it must implement a Small Business Programme for Growth to allow small firms to grow and invest – and this would be a great start.”
Chancellor George Osborne will already have his thinking cap on in terms of the content of the Budget he’ll be delivering on 23 March. The FSB, and millions of small businesses up and down the country, will no doubt be hoping that its VAT plea won’t be falling on deaf ears.
For more information, please visit www.glazers.co.uk
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