Tories have wrong idea with VAT relief, say firms

Date: 14th November 2008

Conservative proposals for a VAT 'holiday' have been met by scepticism from the small business sector.

The opposition were considering a six month reprieve on the indirect taxation, but firms believe that not only do the measures not go far enough, but they could be damaging in the long term.

One man who thinks the proposal is a bad idea is John Smout, who owns a small painting and decorating firm.

He said: "As for the Conservative's VAT holiday, I think they're asking for trouble.

"If you can't pay … at the end of six months, the VAT man will just put you out of business."

In response, the Forum for Private Business and its members have proposed their own solution, which would give enterprises access to the Cash Accounting Scheme, allowing companies the option to defer any VAT owed until they have been paid themselves.

During a televised interview with GMTV, the opposition leader David Cameron also revealed plans to give business start-ups which hire from the jobless register a £2,500 national insurance reprieve.