By Daniel Hunter
Growth and increasing levels of optimism have returned to the UK economy, but for that progress to be sustained small and medium sized businesses (SMBs) are calling for lower taxes. Three out of four business owners (77%) believe that the standard VAT rate of 20% is too high and want to see cuts in order to help them grow their business, new research from Sage has revealed.
The findings from the survey of 400 business owners is being announced on Tax Parity Day (25th September 2013), when publicans, restaurateurs and cafes are being urged to cut their prices by 7.5% for the day to raise awareness of the benefits of reducing VAT in the hospitality industry. However, Sage’s research suggests that SMBs across all sectors see cutting VAT as a way of driving growth.
Almost half of the business owners surveyed (41%) believe that paying less VAT would help their long-term prospects by enabling them to expand their business, whilst 10% indicated that it would free-up more funds to help them retain staff.
The research also identified the level of cuts business owners want to see. One in three people (32%) stated that they would cut VAT by 2.5%, returning it to pre-2011 levels, but for almost half of all respondents this wasn’t enough. Forty five per cent of business owners believe that VAT should be reduced by more than 5%.
“Tax Parity Day highlights an important issue, but what our research has shown is that it’s not just the hospitality sector that believes it could benefit from a reduction in VAT — it’s across the board,” explained Lee Perkins, Managing Director for Sage Start-up and Small Business UKI.
“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, and this is something we’ve been focusing on helping our customers to address.
“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 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. I’d urge everyone that is VAT registered to spend an hour in honour of Tax Parity Day checking you are claiming back on everything that you could be.”
Join us on