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VAT and fuel duty pose greater threat to small firms than harsh winter

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The severe weather has had an adverse affect on many small firms but not so significant as recent tax rises, a new study has claimed.

Figures from the Federation of Small Businesses (FSB) suggest that a quarter of smaller enterprises had to close during the recent bad weather and heavy snowfall, costing on average up to £5,000.

However, a snap poll of 1,300 FSB members found that the increase in fuel duty and VAT are seen as more of risk than the snow.

More than a third (39 per cent) of respondents said that the rise in fuel duty will have a significant impact on their business, followed the 27 per cent who cites by the rise in VAT. Only 24 per cent said the harsh winter had had a similar impact. 

The FSB expressed worries that the unprecedented weather when combined with the high rates in fuel duty will put small businesses on a knife-edge. 

The business group has already urged the Government to introduce a fuel duty stabiliser to avoid a relentless flow of fuel duty increases. 

John Walker, the FSB’s national chairman, commented: “Heavy snowfall and severe weather has put a strain on already hard-hit small firms at such an important time for businesses. This coupled with the increase in VAT and the huge rise in fuel duty is really tarnishing the potential of small businesses, at a time when the Government is putting much of its hope into the sector to put the economy back onto firm ground. 

“While the Government cannot control the weather, it can reduce the impact record fuel duty rates has on everyone, not just small businesses. As small firms recover from the severe weather, the same cannot be said for the tax increases which the Government has said are here to stay.

“It is unacceptable that the Government has u-turned on its manifesto promise to introduce a fuel duty stabiliser and it is vital we see this put in place immediately to remove some of the strain from small businesses so they can get on with the job at hand of creating jobs and helping to grow the economy.”