Research conducted by Intuit, the provider of QuickBooks business and financial management solutions, highlights the discontent among Small Business Britain as a result of the Government’s lack of support. A staggering 91% of respondents said the Budget would have no impact on their chances of surviving the recession, contradicting the Chancellor’s remarks that this Budget would help ease the country out of the economic downturn. This could have a devastating effect on Britain, as small businesses play an integral role in the economy, employing an estimated 13.5 million people.
While the Government claimed that the Budget has addressed small business cash flow issues, 90% of respondents disagreed, highlighting the extent to which the biggest challenge facing businesses in the downturn has been ignored.
Of the measures announced on Wednesday, the most popular were:
- The deferral of the increase in corporation tax to 22%, with 26% of respondents stating it would have a positive impact;
- The doubling of the main capital allowance to 40%, with 17% saying it would have a positive impact.
Top of the list of disappointments was the lack of an extension to the reduction in VAT beyond December 2009, with nearly a quarter (22%) of respondents anticipating a negative effect on their business. This can be put down to the extra administrative burden and cost of having to reverse the changes to systems when the VAT cut was originally introduced.
Diana Flier, compliance analyst at Intuit UK, comments:
“This is a bad Budget for Small Business Britain. What we and our customers wanted to see was real commitment from the Government to ramp up support for small business. Sadly, this has not transpired and businesses are left having to fend for themselves. Our advice is to make the most of those initiatives that were announced, such as the three year carry back scheme and the extension of the Business Payment Support Service, which has proved popular so far. It’s also worth reminding small businesses that in the absence of support from the highest level, there are ways in which they can help themselves by strengthening their business best practices.”
Mark Wordley, of ASUK Accountants based in Staffordshire, and Intuit UK ProAdvisor, adds:
“Darling announced little in the way of fresh measures to help struggling businesses. Tax relief measures are virtually non-existent, which will not help many small businesses experiencing cash flow problems. For these businesses, they will have to look at longer term solutions and sound financial discipline. The hoped for freeze in VAT was not announced, which will almost certainly guarantee a ‘feel bad’ factor in the retail sector as VAT rises again in 2010. For expanding businesses, the new tax rate of 50% and reduction in pension contributions for high earners may well prove to be the last nail in the coffin for business owners wishing to succeed in the UK.”
The survey results are based on responses from 115 of Intuit’s small business customers in the UK. The survey was conducted online in April 2009.