Brown helps SMEs save on accounting fees
Chancellor Gordon Brown's new flat rate VAT scheme will help small businesses shave up to £1,000 off their accountants' fees, according to a Customs regulatory impact assessment.
The scheme is open to traders with an annual tax exclusive turnover of up to £100,000, or £125,000 – including exempt or non-variable income – and enables eligible businesses to avoid having to account internally for VAT.
Instead, they will now have to apply a pre-determined percentage to overall turnover, according to the type of business they operate, in order to determine net tax liability, though they still have to calculate VAT bills on supplies orders.
According to Customs, accountancy fees savings of up to £1,000 are achievable but accept actual savings will vary from business to business.
The department put their formal assessment of savings at £100 for fees and around £750 for between half an hour and an hour of clerical time per week per trader – a total potential savings across the sector of some £225m a year.