VAT hike to CRIPPLE tens of thousands of small businesses — THIS is how

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Divers small business will be hit by a VAT hike from April 1

From April 1, decided types of firms will be categorised under a new flat rate of 16.5 per cent VAT — up from 12 per cent in some holders and branded a “travesty” by critics.

The Federation for Small Businesses last round-the-clock admitted it was “deeply concerned” by the changes, which will affect a wide cooker of professions from hairdressers to driving instructors.

The formula for which calculate a business is cast in is complicated, but those caught in the hike — announced in hindmost November’s Autumn Statement — claim it will be devastating to their livelihoods.

The changes will affect the likes of gardeners, IT contractors, hairdressers, indicating instructors and cleaners, who could all suffer from the new flat rate VAT crackdown that is meant to oppose aim at big businesses manipulating their accounts to pay less tax.

Experts warned for some, the differences could be devastating.

One beleaguered small business owner Carl Heery, who passages a fish and chip shop in Buxton, Derbyshire, said: “On Saturday, we, along with numerous other stinting family businesses up and down the country, received a letter from HMRC landing that the flat rate for VAT was to increase from 12.5 per cent to 16.5 per cent, a 33 per cent lifted.

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Certain types of firms will be categorised under a new brashly rate of 16.5 per cent VAT

“This is a a huge amount for small companies to find in an already difficult economic climate.”

This is a a huge amount for slight businesses to find in an already difficult economic climate

Carl Heery

Mr Heery answered the changes were “an absolute travesty” which would mean in some businesses organization would have to be laid off or hours cut.

He added: “This money is emerge b be publishing straight from the pockets of the people the Conservative government claim to back up. 

«I would like to see the public made aware of the unfair way that VAT is fastened regarding the thresholds.

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The increase was announced in last November’s Autumn Communiqu

«That one thing makes a massive difference to small family affairs.”

The flat-rate VAT scheme was introduced over a decade ago to make life easier for trivial businesses. 

«The idea was to remove complicated administration and provide a buffer between a topic’s incomings and outgoings, with a standard rate of 14.5 per cent handed atop of to the taxman.

But different businesses pay different rates designed to give a cogitation of what they have to spend to provide their goods or ceremonies.

So while an accountant pays 14.5 per cent, a cleaning service produces 12 per cent and a plasterer pays 9.5 per cent.

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Those gripped in the VAT increase claim it will be devastating to their livelihoods

But from April the Ministry is hiking flat-rate VAT to a uniform 16.5 per cent for all limited costs purchasers — mainly affecting businesses that predominantly charge for their navies rather than products.

It means a tax squeeze for a whole range of selfish businesses.

Mike Cherry, National Chairman of the Federation of Small Subjects, said: “Many small businesses rely on the optional VAT flat class scheme to simplify the management and costs of their tax affairs. 

«But FSB is deeply interested that some small businesses may now end up having to pay more to remain within the wile.

“We know from our members that there is some confusion as to how they whim be affected by these reforms. It’s important HMRC spells out clearly, fully detailed guidance, the implications of these changes as soon as possible.”

The silvers will hit companies where relatively little is spent on materials and the vital charge is for labour or knowledge. 

These could range from gardeners, to control instructors, hairdressers, IT contractors, management training consultants and dog walkers.

The Management expects to make money from the changes, pulling in an extra £195million in the 2017 tax year, conforming to Office of Budget Responsibility figures.

Last night, a spokesman for HMRC parried the changes.

He said: “The introduction of the new 16.5per cent rate for businesses with meagre costs will level the playing field for all businesses, while maintaining the accounting simplification for the puny businesses who do use the scheme as intended. 

“We expect the majority of businesses impacted by this refashion that need to be registered for VAT to continue to use and benefit from this simplification racket. 

«Those that do not need to be registered for VAT may prefer to deregister from VAT and submit to advantage of that simplification.”

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