UK SMEs want VAT cut to boost business and economy
New research suggests many UK SMEs crave a cut in VAT to dramatically benefit the economy and their businesses.
More than three quarters of small and medium sized firms feel that the current sales tax is too high, the survey commissioned by Sage found.
The current level of VAT is set at 20 per cent and two fifths of those questioned saw a reduction as the primary driver of improving an economy where many SMEs are still struggling to survive.
They said it would improve their long-term prospects,while ten per cent of SMEs said it would help them to retain their staff.
Keeping top level staff is particularly important following recent revelations that many SMEs would struggle or even cease trading were they to lose one of their key staff.
One in three firms said they would be happy to see the rate return to its pre-2011 level of 17.5 per cent, but more than 50 per cent said it should be cut by five per cent or more.
Lee Perkins, managing director for Sage Start-up and Small Business UKI, said: “For many businesses VAT remains an Achilles’ heel.
“The nuances around reclaiming VAT mean business owners suspect they are not getting all the money they are entitled to.
“Although a reduction in VAT would certainly help businesses, the fact that we are now starting to see tangible growth at the same time as tackling the deficit means that it’s not something we are likely to see in the near future.
“Therefore the focus has got to be on making sure your business is making the most of the current VAT set-up.”
The standard rate of VAT was temporarily reduced to 15 per cent on December 2008 before returning to 17.5 per cent in 2010 before increasing to its current rate a year later.
By Phil Smith