The chancellor's decision to raise the standard rate of VAT to 20 per cent from January 2011 could force small events agencies or freelance organisers to close.
Issuing the warning, the Association of British Professional Conference Organisers said the VAT hike would, at best, leave independent practitioners with little option but to merge.
At worst, it could spell the end for the smallest or youngest freelance organisers, as those with a turnover of less than £61,000 will have to meet the 2.5% increase themselves.
Alongside charities and public sector bodies, such individuals are not required to register with HM Revenue & Customs for VAT, so they now face a new cost which they are unable to reclaim.
“Smaller agencies will struggle to manage increased costs if they are unable to reclaim VAT or not registered for the flat rate scheme offered by HMRC," ABPCO told Meetpie.com
"This could lead to further consolidation in the agency sector, with one-man operations forced to shut up shop and potentially look to consolidate with larger agencies."
Rebecca Cadman-Jones, ABPCO's chair, also expressed concern that professional conference organisers would likely come under further pressure to reduce fees and "deliver more for less."
Jun 29, 2010
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