Businesses that pay their suppliers late should face a 20% VAT “fine”, a recruitment agency has proposed, although one small business group has said the idea could harm rather than help small business.
Beatrice Bartlay, managing director of 2B Interface, a recruitment agency, said late payment is “killing” small businesses.
She has proposed a 60-day trigger point for the VAT penalty. Every company would pay VAT on all invoices for goods and services that are unpaid for more than 60 days.
The extra VAT would not be recoverable after invoices have been paid, making goods and services 20pc more expensive than similar goods paid within the 60-day, cut-off point.
Bartlay argued this simple rule change would...