New Cross businesses squeezed by VAT rise

The increase in VAT sales tax will damage small and medium sized business throughout the UK, a survey has shown.

ELL talked to shop owners and employees in New Cross about the impact of the rise. Lola Oyinlola, an employee at gift shop ‘Shalom-rev’ said: “The increase in price has meant people have refused to pay more for goods that were usually cheaper saying ‘I can’t afford that.’”

“If the difference was not so high we could manage but we may have to look for alternative funding,” she added.

The owner of luggage shop ‘Shade Enterprises’, suggested the council could reduce the rental rates on council owned properties to alleviate some of the financial strain.

He said: “Rental rates are too high and now with the increase in cost from my suppliers we are having to work round the clock to make a profit.”

The survey taken by commercial lenders Aldermore states that around thirty-five percent of all small and medium sized businesses in the UK are under threat due to the rise in VAT.

Philip Monks, Chief Executive of Aldermore, confirmed concerns that the smallest businesses in the country will suffer following the tax increase.

“The VAT rise will only add to the financial squeeze faced by many small and medium sized enterprise. With many of the big banks still reluctant to extend credit, the VAT rise could strain working capital to breaking point,” he said.

When asked about the survey’s findings the council said “The majority of businesses in Lewisham are not VAT registered and are being advised to try to pass on the increase. Those local SMEs that are VAT registered will inevitably be concerned about how the rise will impact on their businesses, although a business survey conducted last year found that many businesses in the borough felt well placed to weather the harsh economic conditions.”

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