By Max Clarke

Speaking regarding the impact of the new 20% VAT rate on SMEs operating under the VAT threshold, Carole Hughes, managing director of credit management and commercial debt recovery experts Daniels Silverman says:

“While businesses which are VAT registered claim it back, smaller SMEs which are under the VAT threshold will have to find another 2.5% to pay the tax man from today, 4 January 2011. This means that keeping outstanding debts under control to reduce the cost of bank borrowing will become even more critical for these small enterprises’ financial health.

“The January move is not the only woe facing SMEs, as looking ahead to April there will be an impact on all businesses due to the 1% increase in National Insurance. 2011 is looking like a tough year where credit management will become paramount.”

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