As UKIP warned at the time, small enterprises were duped by the Cameron government on EU VAT burden. New report shows that the 2013 assessment by HM Revenue & Customs far underestimated the impact of new EU VAT rules.
•Margot Parker, UKIP MEP for the East Midlands and spokesman for small business, today attacked the Cameron government's "sly and misleading" assurances last year that they would protect the UK's small enterprises from new EU demands on VAT:
"As UKIP warned at the time, a report out today shows the Government's assurances have proved worthless. Thousands of small firms have been forced to take a painful hit to profits while other micro-enterprises have already been forced to close."
"Today, Enterprise Nation, a network of small entrepreneurs, has released a report which shows that the 2013 assessment by HM Revenue & Customs far underestimated the impact of new EU VAT rules. HMRC said 5,000 businesses would be affected. The report shows the figure could be more than 350,000."
"A spokesman for Enterprise Nation tells us that the EU VAT regulations have caused havoc in the digital small business community."
"These hundreds of thousands of micro-enterprises could close or see their profits hit because of the burden of this new EU VAT regulation which the government has proved powerless to stop," said Parker.
New EU rules effective from January 1 force entrepreneurs who sell online to EU customers to register for VAT. Although the rules were meant to target online giants such as Amazon, the EU is forcing businesses to register even when their annual revenues are below the £82,000 threshold which leaves them exempt from registering for UK VAT.
Parker said: "Last year when Enterprise Nation and other groups of small businesses told the Government that this burden of regulation would be impossible for thousands of them to bear, the Government sent negotiators to Brussels and promised UK micro-entrepreneurs a better deal would be secured."
"EU officials brushed aside the Cameron government's attempts at negotiating a better deal. Not one other EU member state answered the government's pleas for support in this issue.
"After his officials failed in Brussels to negotiate a break for British small companies, David Cameron said he would raise the issue at the European Council meeting last March.
"All Cameron came away with was a vague indication by Jean-Claude Juncker, the president of the European Commission, that Commission Vice-President Timmermans would include the issue in a vast review of the single digital economy. However, the review by Timmermans conveniently for Cameron will not be published until at least the day before the general election. This means Britain's micro-entrepreneurs will not have time before casting their ballots to analyse the report to see if the Government has secured any relief for them or not."
Parker added: "However, since the official commission position is that having the same regulations for online commerce across the EU will increase sales and profits, the fact that the British experience has proved to be exactly the opposite gives us little hope the commission will admit they were wrong."