Entrepreneurs lament VAT rise

Date: 14th February 2011

A number of leading entrepreneurs have lamented the coalition's recent move to increase the VAT rate from 17.5 per cent to 20 per cent.

Recent research by Investec Specialist Private Bank has shown that 40 per cent of respondents feel the rate rise has had a "detrimental" impact on the UK's economy.

According to the report, 40 per cent of respondents are concerned about the impact of the move, while six per cent are very concerned.

Ed Cottrell, from the bank, said: "Despite some entrepreneurs having concerns about the impact that 20 per cent VAT will have on the economy and their businesses, many are feeling more optimistic about their prospects this year when compared to 2010 and the vast majority are expecting to see a rise in their cashflow and revenue.

"We are looking to play an active role in partnering many of them in growing their businesses and taking advantage of the opportunities they see."

The report also showed that 34 per cent of businesses have put their costs up to deal with the rise, while 25 per cent have let staff go.

A further 16 per cent have cancelled expansion plans, while three per cent have been forced to close their business altogether.

Posted by Emily Smith