The FSB (Federation of Small Businesses) has recently called on the Government to raise the VAT threshold from its current level of £85,000 to £100,000.
It argues “this would give firms stepping into the VAT-paying ring crucial breathing space. It would also be an incentive to grow their turnover without fear of having to charge customers an extra 20% overnight”.
At the moment, the OBR (Office for Budget Responsibility) says many small firms are keeping their turnover just below the £85,000 threshold.
As businesses struggle to restore their activities after the last few bruising years it seems foolish to ignore something that could help them grow.
It becomes even more difficult when SMEs have to outsource some of their functions because they do not have sufficient expertise in house.
This too can hamper growth, especially if the deadlines are not met or billing takes a long time.
Transparency in payment agreements, with specified amounts and dates need to be set as part of the initial agreement at the outset of the arrangement.
Small businesses are the engines for growth in the economy.