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VAT cut has failed, say SMEs

26 February 2009
Categories: News , VAT
Move will result in no material increase to business: survey

An overwhelming majority of small and medium enterprises (SMEs) believe the temporary VAT cut has been a failure, according to Access Accounting. 

A survey by the business-software house shows that 82% of firms believe that the 2.5% reduction in the standard rate was a bad idea, and 98% feel the change will not result in any material increase to their business.

The figures also claim that more than half (51%) of SMEs say the change is not doing enough to stimulate the economy, while 27% believe it was a good start but that the Chancellor needs to do more.

When asked what other steps the Alistair Darling could take to help small businesses:

  • 21% of respondents suggested he should force banks to pass on rate changes to business overdrafts and loans,
  • 19% wanted a decrease in corporation tax rates,
  • 16% recommended increases in tax allowances for SMEs,
  • 16% demanded a reduced legislative burden on employers,
  • 13% wanted better protection for SMEs from bad debt situations.

The cost of implementing the VAT change was estimated at under £100 by 53% of businesses - but the time-costs associated with the change varied: 25% required less than a day to make alterations, 42% spent half a day, 15% used between one and two days, 6% took more than two days, and 12% are still addressing the issue, and.

‘The results of this survey show that more could be done to help boost the economy without putting greater time and cost pressures on small businesses,’ said Access Accounting’s Kevin Misselbrook.

‘The VAT rate cut has been more of a burden than a boon to SMEs, forcing them to look internally for ways to save money and operate more efficiently.’

Categories: News , VAT
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