Small companies are 'taking VAT rise in their stride'
Small businesses in Northern Ireland are coping well with the recent VAT hike to 20%, a survey has claimed.
According to the business barometer from Close Invoice Finance, 40% of small to medium-sized enterprises reported that the rise had no impact at all on their business. Half of the small businesses researched by the barometer said the impact on their business of the tax rise had been small.
Harry Parkinson, head of Close Invoice Finance in Northern Ireland, said: "It's heartening to discover that the majority of businesses polled aren't experiencing any major adverse effects of the recent VAT hike, particularly given the fact that the findings of our survey in 2010 showed that 38% of SMEs in Northern Ireland were expecting to find it difficult to cope.
"One in 10 SMEs in the UK previously stated that they believed the increase would put them out of business in early 2011, compared with one in 100 now. It's reassuring to learn that these businesses, who are undoubtedly vital to our economic recovery, have been able to deal with the change."
The business barometer also asked SMEs about the methods they were using to cope with the rise, revealing that just under a third are passing the increase to customers. Mr Parkinson said: "It remains to be seen whether this will discourage consumer spending, meaning a decrease in sales.
"So although there's reason to feel optimism at the moment, small firms need to keep a close eye on their order books and should perhaps be looking at their cash flow to find a way to absorb some of the increase themselves."