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Wednesday
Apr282010

Will VAT Rise Under A New Government?

The issue of VAT seems to have reared its ugly head as far as the party manifestos are concerned.  I have noticed that no one in the main parties has stated what their position is on VAT.  Consequently we have politicians pointing to the vagueness of VAT plans in other party manifestos, while simultaneously refusing to state whether their own party will be raising VAT.

I read yesterday that the Lib Dems have claimed that  the Conservatives want to raise VAT to 20.5%.  Those claims were unsurprisingly refuted by the Tories, although some in the Labour party have also claimed that the Tories have a secret plan to push up the rate of VAT should they win power.

Perhaps more surprising is the equally vague message given by the Labour Party.  Despite the fact they have never raised VAT since winning power in 1997 and have no firm plans to do so now, the Chancellor will not confirm that VAT will not rise under Labour.  It is this refusal to guarantee no rise that makes me wonder if he would consider it at some point in the future.

Of course we know that promises are broken by politicians all the time.  But a rise in VAT would have a direct effect on every business in the UK – particularly those who are registered for VAT.  Prices would rise and this could damage many businesses, especially smaller ones.

In reality I think whichever party wins we cannot be sure that VAT will not eventually go up.  If you would like to discuss the effects that VAT rates have on your business – whether you are currently VAT registered or not – please call us here at StMatthew to benefit from our professional advice.

 



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