Chancellor should extend VAT holiday, say managers
MINISTERS should extend a cash flow lifeline to businesses struck by Covid-19 by allowing them to put off billions in VAT payments for longer, an exclusive poll has found.
Companies have deferred a total of £27.5bn in VAT payments due to HMRC between April and June until March next year to help stay afloat.
But the scheme expired at the end of June and the Chancellor, Rishi Sunak, declined to renew it as part of the £30bn package of measures set out in last week’s summer statement.
A survey of 1,500 senior managers across private and public sectors by the Chartered Management Institute found that 57pc were in favour of extending the deferral, against 27pc who
‘Firms will require flexible government support to weather this economic storm’
said it should finish.
Mr Sunak also confirmed plans to close down the furlough scheme from the end of October, instead opting for more targeted measures such as a VAT cut to help protect 2m jobs in the leisure and hospitality sector.
Ann Francke, chief executive of the CMI, said: “Managers understand why hospitality needs a VAT holiday. But many other hard-hit sectors want to see something similar. Why not extend this VAT holiday to help them reduce costs, stimulate demand and save jobs?”
Suren Thiru, head of economics at the British Chambers of Commerce, added: “Firms in many sectors are continuing to operate at reduced capacity and will require flexible government support to weather this economic storm.”
The CMI survey revealed that 35pc of managers expect their organisation to shed jobs by the end of the year, although 53pc agreed with the decision to end the furlough scheme.