Small businesses may not welcome an increase in the country's VAT rate, it is believed, as their profits could be affected.
According to Edward Rimmer, the UK chief executive of Bibby Financial Services, a VAT rate of 20 per cent could negatively impact on the operations of some small and medium-sized enterprises (SMEs).
He said: "Some of the smaller players, particularly in those industries which adhere to tight profit margins, simply cannot afford to subtract an additional 2.5 per cent from their profit and loss account."
When looking to improve their business cash flow, the expert suggests that SMEs, which might include the likes of contractor companies, might want to take action now rather than waiting until the coalition government's emergency Budget next week (June 22nd).
Meanwhile, the issue of small business finance has also recently been discussed by the Bytestart.co.uk director Emyr Williams, who revealed that firms may be finding it hard to gain access to favourable loan rates from banks.
Posted by Susie Cho.