MP calls for changes to be made to VAT threshold following concerns raised by local tourism businesses

6.19.00pm BST (GMT +0100) Tue 26th Jun 2007

Local MP Tim Farron has seen for himself some of the key issues facing local tourist business during a visit to Oldfield House Bed & Breakfast in Windermere.

The MP joined owners Paul & Marion Want to 'muck in' with preparing breakfast and cleaning rooms on Saturday morning. During his visit Tim discussed some of the key issues facing the business - in particular the impact of the VAT threshold on small businesses.

Tim said: "The visit on Saturday morning was a real eye-opener. I was especially surprised that businesses like Oldfield House turn down thousands of pounds worth of business a year because of the way the VAT threshold works."

The VAT threshold works on an 'all or nothing' basis. As soon as a business reaches the £65,000 threshold it has to start paying VAT based on its entire turnover overnight - causing huge financial problems in a sector where it is difficult to put up prices by large amounts.

Tim continued: "It is simply daft that the tax system produces such a disincentive for small businesses to grow. We need to look at ways at removing this false ceiling on turnover of small businesses."