VAT reduction proposals welcomed by The Construction Centre.co.uk

PRLog (Press Release) – Jul 16, 2008 – The Construction Centre.co.uk said that for the building industry in particular, this move could significantly help local firms and close the gap between the VAT registered and non registered businesses.

For a long time local building firms have suffered in the market place by being undercut by others offering the “cash in hand” option to potential customers. A reduction in VAT rates could precipitate a significant shift in business profits as clients would be more likely to opt for a slightly more expensive quote from a reputable firm. The Federation of Master Builders (FMB) has seen the move by the European Union as a victory for the professional builder and house owner however the UK government has only thus far committed to study the proposals in detail despite welcoming the move.

The Construction Centre said that the treasury earned £84 billion in VAT revenue in 2007 which in the current economic climate would have helped sustain reserves. A reduction in this figure even if only from small businesses, could further exacerbate the governments already floundering financial status.

If the plans do go ahead it could mean that local business would flourish and help smaller firms to weather the ensuing economic recession. Brian Berry Director of External Affairs at the FMB said “In Italy when they cut their VAT rates, 35,000 enterprises emerged from the informal economy and started paying VAT for the first time, this then lead to the creation of between 65,000 – 75,000 new jobs in the construction industry.”

With over seventy percent of MP’s behind the scheme, the government will seriously have to consider the proposals presented by the EU and whether the positive effect it will have on the small business economy outweighs the negative effect in the treasury’s bank balance.

Richard Simmons, Managing Director at The Construction Centre said “With so much doom and gloom in the building industry right now, it is crucial for the government to help keep businesses afloat. SME’s (Small to Medium Enterprises) are the back bone of the UK, they are the big business of tomorrow. The reduction in VAT will allow smaller firms to level the playing field with the cowboys and drive local economies forward, sustaining the industry and increasing the quality of work completed. This move, if implemented can only have a positive effect on the construction industry.”

The Construction Centre said that it was imperative for the UK government to approve the proposals and allow the changes to take place in order to stabilise the economy from the ground upwards. With construction businesses looking for ways to market while cutting back on spending any tax relief to help firms survive would only be welcomed by the industry.

For more information visit:
http://www.theconstructioncentre.co.uk