MP Derek Thomas urges Government for rise in VAT threshold to help small businesses

As part of a campaign to help small businesses in his constituency, West Cornwall MP Derek Thomas has urged the Treasury to raise the VAT threshold.

Currently the threshold stands at £83,000 for small businesses, a figure which, says Mr Thomas, is encouraging many of Penwith’s smaller concerns, particularly in the tourism sector, to cut back on their trading at certain times of the year in order to avoid a bigger tax bill.

Mr Thomas has raised questions in Parliament on the issue and met Jane Ellison, the Financial Secretary to HM Treasury, to discuss the matter further; he also wants local businesses to contribute to the debate which they can do online or by email. 

“The current system is having a harmful impact on the economy of West Cornwall and the Isles of Scilly as it is helping to contribute to periods of economic vacuum,” said Mr Thomas.

“Many of our smaller businesses in West Cornwall are heavily reliant on tourism and what they are doing is closing down or scaling back their business during the off-season to remain competitive and so avoid the administration associated with VAT.

“Unfortunately, this has a detrimental impact on the West Cornwall economy by compressing the tourist season into a few short months; it also affects employment opportunities for workers and reduces the tax the Government can collect through PAYE.

“Raising the tax threshold would create an incentive for the owners of West Cornwall’s small tourism businesses to open for longer periods each year which would help to put more money into our economy, benefitting the high streets in towns like Penzance, St Ives and Helston.”

Mr Thomas is raising the issue at a time when the Office for Tax Simplification (OTS) is undertaking a review into how the VAT system can be improved and simplified and the office is currently seeking the views of businesses and tax advisers.

“We already have the EU's most competitive threshold but I believe further changes would increase economic activity,” he added.

“My plea to businesses in West Cornwall and on Scilly is to assist my campaign and take part in the consultation.”

If you would like to have a say on the VAT, visit 
or email to share your views.