SMEs face fines over VAT reversion

Many small-to-medium enterprises, including sole traders and limited companies, are not ready to adjust their finances to meet the end of the temporary VAT cut in January 2010.  

The Federation of Small Businesses (FSB) told the Daily Telegraph that UK businesses may pay the incorrect amount in tax, which could lead to heavy fines being administered.

Organisations are confused about the amount of tax they should be paying when VAT will increase to the rate of 17.5 per cent.

Chancellor Alistair Darling reduced the rate of VAT to 15 per cent to help businesses during the economic downturn.

Stephen Alambritis at the FSB told the news provider: "Companies will be suffocated by further red tape as a result of the change and they will face crippling tax fines if they get their tax wrong."

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