Some companies to be hit with VAT changes

As the new VAT rate of 15% comes into power today it has emerged that some smaller companies may actually find themselves worse off because of the cut that has been made. Firms that take advantage of the government’s flat rate tax will now keep a lower proportion of the tax that they take from their customers. This information strongly contradicts the information that was given out on the pre-budget report that said that all companies would benefit. HMRC have said that companies will benefit from paying a lower VAT rate on any expenses that they.

So although some companies will actually pay less on their expenses they will in fact take a lower proportion of tax that they get from their customers. There is a growing debate from many parties as to whether the cut in taxes is actually a benefit to smaller organisations or if it is in fact going to make them worse off.