FSB: SMEs will be forced to pass VAT rises on to customers

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FSB: SMEs will be forced to pass VAT rises on to customers

Wed 23rd Jun 2010

Small businesses will be forced to pass VAT rises on to their customers, it has been suggested.

Chancellor George Osborne announced in his Budget yesterday (June 22nd) that VAT will increase from 17.5 per cent to 20 per cent from January.

A female spokesperson for the Federation of Small Businesses (FSB) said many companies do not have the capacity to just absorb these extra costs.

"Big firms have the cash flow available to not pass on all of the increases to their customers, which small firms do not have - especially in the current economic situation," the representative noted.

She added that the FSB believes the necessary pain of tax rises must be offset by measures that help to support businesses.

A recent study carried out by uSwitchforbusiness.com revealed that 87 per cent of company bosses believe a rate hike will have a negative impact on their organisation, with 33 per cent predicting a fall in customer spending.

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