25% cut in public sector - the biggest headline?

A._Badger

robin_banks wrote: »

you mean reclaim input VAT, pay output VAT.

And thus it will not trouble them.

Old_Slaphead

robin_banks wrote: »

you mean reclaim input VAT, pay output VAT.

It still makes no difference to business (unless increased VAT reduces consumer demand)

markharding557

Fatballz wrote

For political reasons, you know what the papers would be saying about the Tories attitude to the poor and sick if they cut aid or the NHS!

That did not stop them in the past
Robin banks wrote

The argument used to be aid brings trade, I don't know if that holds true though

I think that is very unlikely,in fact we usually loose trade to poor countries

tomterm8

Old_Slaphead wrote: »

It still makes no difference to business (unless increased VAT reduces consumer demand)

It's aggregate. People barely noticed the changes to the vat last time, and there was a fuss about how it wasted money, but if you look at the aggregate figures... well, a 2.5% increase in VAT brings in £13 billion in new tax revenues, which suggests that it probably going to reduce consumption by at least than much, and therefore an effect on businesses.

Norfolk_Jim

tomterm8 wrote: »

It's aggregate. People barely noticed the changes to the vat last time, and there was a fuss about how it wasted money, but if you look at the aggregate figures... well, a 2.5% increase in VAT brings in £13 billion in new tax revenues, which suggests that it probably going to reduce consumption by at least than much, and therefore an effect on businesses.

Will it really? I'd think that within a few months most peoples spending will have returned to whatever it typically was before the increase. Will I really use 2.5% less electricity, gas, petrol, pet food, clothing because of this? More likely that I'll make changes in other areas because of the overall effect on me - holidays (or no holidays), eating out, football. I think only some businesses are going to be affected.

useless

ooo, lots of replies to my thread, how exciting!

eek for October hey...

Thrugelmir

A._Badger wrote: »

Businesses reclaim VAT. It will make no difference to them.

Depends on the type of business. So will effect some, such as insurance companies for example.

All businessess that allow their customers credit terms will suffer in terms of cashflow. As the money will be paid over to the exchequer prior to customers paying.

Old_Slaphead

Thrugelmir wrote: »

Depends on the type of business. So will effect some, such as insurance companies for example.

All businessess that allow their customers credit terms will suffer in terms of cashflow. As the money will be paid over to the exchequer prior to customers paying.

Not necessarily.

Most pay VAT quarterly - the month end following the quarter end.

ie Jan-March quarter due end April (slightly later if paying by BACS transfer). If customer terms are 30 days (or 30 days EOM) most will have paid before VAT is due.

Opposite of course applies with purchases.

Thrugelmir

Old_Slaphead wrote: »

Not necessarily.

Most pay VAT quarterly - the month end following the quarter end.

ie Jan-March quarter due end April (slightly later if paying by BACS transfer). If customer terms are 30 days (or 30 days EOM) most will have paid before VAT is due.

Opposite of course applies with purchases.

How I would love to find customers that paid in under in 30 days !

The real world is that the majority of larger businessess hang onto their money for as long as possible. Its a British trait. Payment in 60 to 90 days is not uncommon. Sometimes you have to agree to these terms to win the business.

Government departments and local councils are very good at paying.

More companies fail for cashflow reasons than being a poor business.

vivatifosi

The unanswered question with the VAT increase and businesses is the impact it will have on the flat rate scheme. When the rate temporarily went down to 15%, my flat rate was less beneficial. Wouldn't surprise me to see the same happen when it goes up.