Firms urged to keep better records on tax

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Small firms are calling for a cut in VAT and the extension of the National Insurance Contributions holiday to boost falling business confidence.

The Federation of Small Businesses says weak demand and rising costs have caused a further fall in confidence, which is already in negative territory, with more firms expecting things to get worse than to get better.

Federation regional chairman and Sheffield businessman Gordon Millward said: “As businesses come to terms with the double whammy of falling revenues and rising costs, it is no wonder that they’re losing confidence, and unfortunately, as their overheads increase one way to control it is to lay off staff.

“It is the first time since we started the Index that we have seen more people believe that they’re going to lay off staff than take them on. This has to show the Government that a more robust plan for growth is needed.

“Moreover, this is the first time that we have seen confidence in all regions of the UK in negative territory. We urge the Chancellor to look closely at our NICs holiday proposals and bring this forward in his Autumn Statement. We fear that without it, the recovery will falter once more.”

Currently, National Insurance Contribution (NIC) holidays are only available to business start-ups and the FSB would like to see them extended to all small firms. It argues that an extension would ease cost pressures on small firms and create new jobs, boosting the tax base and bringing more money in for the Treasury.

The FSB adds that falling consumer demand is also a large barrier to economic growth. It is urging the Government to follow the lead of other European Union countries and cut VAT in the construction and tourism sectors to five per cent for a year to give the economy a real boost.