Reports that the Chancellor is about to lower the threshold at which small businesses start paying VAT can’t possibly be true, surely? Can the Chancellor truly be that daft? Can’t he see that it would be political and financial suicide for him?
There are stories all over the media that Phillip Hammond is set to lower the amount of turnover a business can do before needing to register for VAT from £85,000 to about £30,000. It is said by people smarter than us that it will raise around £2 billion per year for the treasury. This one being from the Daily Mail
UK businesses, including the likes ours are already overburdened with form filling and reports we need to send to multiple Government agencies. To expect small businesses with minimal income to now have to comply with complex vat returns each quarter is going to send many out of business. Who could blame them. We've almost called it quits a number of times because of Government policies.
With most small businesses typically being Tory supporters, this is going to go down like a lead balloon in Tory circles. If Mr Hammond does this, the Government will fall by spring.
At the end of the day, the £2 billion pound that it does raise will have to come from somewhere. It will come from the people who use the services of small businesses, the people who use window cleaners, hair dressers etc. As with all tax, it gets passed down to ordinary members of the public. If services like this suddenly become 20% more expensive, people will also stop using them.
For this reason, we are sceptical that these reports are true. Nobody can be that stupid. But this is Philip Hammond, the guy who thinks Thunderbird 3 will be grounded if we don’t give all of our money to Brussels.
Normally we would say there is zero chance that these reports are true. Something about this leak doesn’t appear to be going away though. This means we are sort of conflicted in our predictions. On one hand it is completely nuts, on the other hand it isn’t being denied like it usually would be if it was false.
Anyway, with the budget statement being announced on Wednesday, there is still time for No 10 to intervene if they disagree. If they don’t intervene and allow this to happen, they will bury themselves in the fallout that will follow.
The Maybot will be toast before Christmas.