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Over 70% of small businesses are expecting the recent VAT rise to have a detrimental effect on their business, according to a new member survey from the Federation of Small Businesses.

A ‘Voice of Small Business’ panel survey found that 71% of the 1,600 respondents expect the VAT rise to 20% to have a negative impact on their business, with 52% expecting to increase prices and 45% expecting a fall in turnover and 36% therefore expecting a loss of customers as a result.

The FSB is urging the Chancellor to review the increase when the current defecit has been significantly reduced and to return it to 17.5%. The FSB has also been asking the Govenrment to help alleviate the strain on businesses by increasing the VAT threshold, from the current rate of £70,000 to £90,000.

MoneyHouseDIY Doctor is concerned that this VAT rise may encourage homeowners to dodge paying it by either employing a tradesman who is not VAT registered or by paying cash for large jobs.  This will only encourage the cowboys in the industry to benefit. As DIY Doctor’s own building contract says

‘Never use a contractor who is not VAT registered for any job over £5,000. The VAT threshold is £70,000 and a small extension or average refurbishment job costs around £20,000. For your contractor not to be VAT registered means he has only done small jobs in the past or he has done less than 4 big jobs this year. Good contractors are ALWAYS busy so if your contractor is not VAT registered then he is either too small to do your job, or he has not been busy.’

It goes on to say ‘Paying cash for your job might save you 20% but it leaves you no comebacks whatsoever should there be any problems and if the person who wants to buy your house asks to see the guarantee on the work, it will not be valid. Furthermore it is illegal to defraud the taxman. In short there is no reason whatever why you should use a contractor who is not VAT registered.’

Read more about contracts and receive our FREE ‘Desired Outcome Building Contract’ by clicking here. 

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