Will VAT rule change benefit small firms?

Date: 11th November 2011

Small business owners around the UK could be among those affected by recent changes to the country's VAT rules.

The coalition has announced that the Low Value Consignment Relief on goods shipped from the UK to the Channel Islands is to be removed.

This, the government claims, will boost the UK economy, increase the country's tax yield and make the business environment fairer on small enterprises.

David Gauke, exchequer secretary to the Treasury, commented: "These reforms will ensure that UK companies, especially small and medium sized enterprises, can compete on a level playing field with those larger companies with the resources to set up operations in the Channel Islands.

"By making these changes, we are striking the best possible balance between the costs of collecting small amounts of VAT and protecting the interests of UK taxpayers and businesses."

The move is expected to see UK retailers compete with online stores such as Amazon and Play, which have sold products at reduced prices in recent years.

Posted by Emily Smith