“VAT rises will hit SME’s much harder because they do not have the reserves to absorb the practical and administration costs of implementing pricing and accounting changes. Changes last year are believed on average to have cost £1500 per business to implement,” said Ms James, who is also MD of The Coaching Academy.
The EBA has been created by television ‘Dragon’ James Caan in conjunction with Bristol-based businesswoman Bev James earlier this year as a one stop resource for business owners and aspiring entrepreneurs.
The Chancellor expects to raise approximately £13billion per annum by 2014/15 from the 2.5% rises that will come into effect next January.
“Hiking VAT to 20% will also hurt small firms because they have to pass the increase on to their customers, unlike big business, which can absorb it,“ said Ms James.
“The Government need to think hard about the impact this is going to have on SME’s. SME’s employ 59% of the private sector workforce in the UK, with many facing low profits, this increase could endanger many businesses that are struggling to survive.”