VAT rise will be a blow, says insolvency specialist

Date: 23rd June 2010

UK businesses that are already struggling and rely on consumer spend have bean dealt a "further blow" with the news that VAT is set to rise early next year.

This is the view of the insolvency trade body R3, which said the move will mean consumers are forced to reduce their spending.

The comments come after chancellor George Osborne used yesterday's (June 22nd) emergency Budget to confirm that VAT will rise from 17.5 to 20 per cent from January 4th next year.

Commenting on the rise, Steven Law, R3 president, said: "The increase in VAT … will be a further blow to those struggling businesses that rely on consumer spend, making spending more expensive at a time when consumers are already tightening their belts.

"Retailers and restaurants, especially, will find themselves between a rock and a hard place as they struggle to work out what will damage their bottom line more; taking on the extra tax burden or suffering an inevitable fall in consumer demand if they pass the tax on."

Posted by Jacob Williams