The VAT increase continues to cause misery for Britain’s growing businesses.
The VAT increase – due on January 4, 2011 – continues to confuse and frustrate SMEs. The latest survey shows that one in five businesses still doesn’t know how to respond to the VAT increase.
Reactions to the VAT increase vary. Two in five plan to increase prices immediately on January 4, while nearly 30 per cent plan to absorb the VAT increase within the business. A further ten per cent plan to gradually increase prices over a period of time leading to January and four per cent have already increased their prices.
Steve Hodgetts, head of VAT at Baker Tilly, who conducted the survey, says businesses need to be smart about tackling VAT. “You need to be ensuring that they’re maximising their VAT recovery, recovering it at the earliest opportunity they can.
“You need to apply all the reliefs correctly and, importantly, must ensure that you’re not making careless mistakes – the penalty regime for non-compliance is severe,” he warns.
In case your business still hasn’t made any changes, here are some good guides to dealing with the VAT increase:
If there are any particular areas that you’re confused about, or if you’d like us to cover certain areas in more detail, get in touch here or leave a comment below.