Worries voiced over VAT rise in the new year

BUSINESSES have mixed views on how they will cope with the planned VAT increase being introduced by the government on January 4.

Six out of ten believe that the increase from 17.5 per cent to 20 per cent will affect cashflow but nearly one tenth think cashflow will be affected significantly, according to the findings from the West Yorkshire Society of Chartered Accountants.

A third of firms have said they will try and absorb the increase within the business, just under a third will increase prices and the rest plan a mixture of both.

Tim Parr, society president, said: "At a time when companies are facing a tough 2011, having to change the VAT rate is not a good way to start the New Year."

He added: "Many will be worried about the effect it will have on sales in the first quarter but preparation is the key to help ensure the transition is smooth."

Accountants Hentons merge with York-based Forster Scott & Co