Increase the VAT Threshold, Save Businesses

We’re backing a campaign to get the VAT registration threshold increased to 100k.

Currently, if your business turns over £67k or more then you are obliged to register for VAT.  Sometimes registering for VAT can be beneficial, and if you are using software like KashFlow then the administrative burden is virtually non-existent – it calculates files your VAT returns directly to HMRC.

But  for small businesses that sell to consumers, VAT registration can cause a real problem. Their customer can’t reclaim the VAT – so the business can either put up their prices or take a big hit to their profits.

Elaine Clark from Cheapaccounting.co.uk has started a petition. She says

I have a client who is approaching the VAT registration threshold. They cannot increase their prices to cover the VAT to be paid to HMRC as there is a large competitor in the vicinity and the price competition is tough so they will have to absorb the VAT into their profit.

It will probably mean the closure of their business and the loss of their livelihood. This is something which I think should be avoided.

So if this government are serious about helping small businesses survive the downturn, they can start by increasing the VAT registration threshold to £100k.

Please take 2 minutes to sign  this petition – it will help to save small businesses.