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Less Than Half of Operators will Pass on VAT Increase – RoadTransport (UK)

Only four-in-10 owner-operators and couriers plan to pass on 100% of next year’s rise in VAT to their customers, while more than half say the shift to 20% VAT will hit transport harder than other industries.

Last month, online loads service uShip surveyed more than 5,000 operators of light and heavy CVs, all of which had a fleet of 10 or fewer vehicles, and found that 53% believed the increase in VAT would have a significant impact or threaten to put them out of business.

In June, the Chancellor announced, as part of the emergency Budget, an increase in the standard rate of VAT from 17.5% to 20% effective from 4 January 2011.

Shawn Bose, general manager of global business at uShip, says: “What we found most surprising about the survey results was the extent of operators who had a negative business outlook, with just 5% feeling they will be more profitable over the coming year. This is reinforced by the majority feeling the VAT increase will create significant uncertainty or threaten to put them out of business entirely.”

When asked if the owner-operators and couriers would be able to pass on the VAT rise to customers, 40% said they would pass on 100% of the rise, 11% would only pass on some of the rise, 22% said they would absorb the rise fully, while 27% said they did not know how much they would be able to pass on.

However, Jack Semple, director of policy at the Road Haulage Association (RHA), says: “Hauliers will be watching the impact of the VAT rise on consumer demand and, therefore, the demand for haulage.”

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