Page last updated at 11:23 GMT, Friday, 24 October 2008 12:23 UK

Tax threat to surf school staff

Surf's Up
Surf's Up says small firms need more encouragement from the government

One of the West Country's biggest surf schools says it may have to lay off staff unless it gets a VAT reprieve.

Pete Craske of Surf's Up in Polzeath, Cornwall, said the firm had received a bill of 35,000 for the last quarter.

He said jobs could be risk and called for service industries to be exempted from VAT.

Mark Richardson, who runs a small business in Plymouth, backed the idea claiming he would be able to employ another person if he did not pay VAT.

We need encouragement, but you feel like you are hitting your head against a brick wall
Pete Craske

Mr Craske, who has run the surf school in Polzeath for 13 years, employs four people full-time all year and 25 people part-time in the summer.

He told BBC News: "The current taxes on small businesses need to be revised.

"As a small service business we've just had to pay a vat bill of 35k, with nothing to write against it.

"That makes it very hard to make it work and can only result in redundancies."

Mark Richardson
One of the cruellest things that we have is VAT
Mark Richardson
He said VAT should be cut, but rejected the Conservatives' call for a VAT holiday which he said would only "defer the pain".

"You feel like you are working for the government on top of all the other taxes we have to pay," he said.

"Small businesses can inspire the country to get out of this mess.

"We need encouragement, but you feel like you are hitting your head against a brick wall."

Mark Richardson, of florists Triffids in Plymouth, also said he would like to take on more people, but VAT was crippling the company.

He said: "One of the cruellest things that we have is VAT.

"That can floor all our takings quite easily and if I didn't have to pay so much VAT I could employ another person.

"I am working up to 80 hours a week in here and with national minimum wages, my wage goes down."

The Conservatives have called for a six-month VAT holiday and 1p cut in payroll taxes for firms with fewer than five employees, but Lord Mandelson, the Business Secretary, has dismissed this.

He and Chancellor Alistair Darling are meeting chief executives of Britain's leading banks on Friday to urge them to maintain lending to small businesses.

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