FSB discovers small business 'stealth tax'

Date: 4th March 2010

When VAT reverted back to 17.5 per cent earlier this year it meant a rise in the flat rate paid by a number of small enterprises, the Federation of Small Businesses (FSB) has claimed.

According to the organisation, some businesses have experienced flat rate VAT rises of 2.5 per cent.

The FSB described the rise as a "stealth tax" and said the increase was "huge".

John Wright, national chairman of the organisation, said: "While a few sectors have seen a decrease, the majority of businesses will see their rates rise, which is unacceptable at a time when cash-flow is limited.

"The FSB believes that this is a stealth tax, which will affect a firm's overall profitability, deliberately directed at small businesses during the recession. The FSB believes there needs to be more openness in how these rates are calculated and when they rise."

Earlier this week the FSB called for a "complete freeze" on National Insurance contributions and a complete reform of the current tax regime in order to allow businesses to survive in the post-recession climate.