WA77

Small firms welcome plans to reduce VAT for labour intensive businesses

Small businesses have welcomed the announcement that the Government will be treating as a priority the issue of reducing VAT on labour intensive service businesses.

Following an Ecofin Council meeting, which was attended by UK Chancellor Gordon Brown, the Luxembourg Finance Minister said that the issue would be a priority for the next two EU presidencies.

The Forum of Private Business (FPB) described the announcement as 'a major step forward for manual labour intensive industries', which include such businesses as builders, hairdressers, painters, decorators and window cleaners.

FPB chief executive Nick Goulding said, 'There is a real problem in these industries with businesses operating below the VAT threshold gaining a competitive advantage over those above it'.

According to the business group, an EU pilot scheme offering reduced level VAT has succeeded in encouraging businesses out of the black economy, and the FPB has urged officials to consider introducing a similar scheme in the UK.

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