VAT 'holding back small firms'

The Forum of Private Business (FPB) has called on Customs and Excise to create a fairer system of VAT enforcement for small businesses, to enable them to compete against larger firms.

The business group made its comments in response to a recent appeal by Customs and Excise against a High Court case brought by department store Debenhams.

Customs and Excise is appealing against the contention that revenues from card-handling services should be exempt from VAT because they constitute financial services.

Nick Goulding, chief executive of the FPB, said, 'While FPB welcomes this move from Customs and Excise to get tough with big business over VAT, small firms are still operating at a competitive disadvantage when it comes to VAT enforcement'.

Mr Goulding highlighted the fact that supermarkets are able to sell hot food without charging VAT, commenting, 'It is ludicrous, at a time when small high street businesses are finding it harder and harder to compete with supermarkets, that the tax system should actually favour the big chains'.

The FPB is also calling for an extension of the EU pilot scheme giving reduced VAT commitments for 'labour intensive' industries, including hairdressing and window cleaning.

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