With the general election this week, there’s a lot of talk about what it means for small businesses. 65% of business owners say that they don’t expect political parties to introduce policies to undermine them. You can see what each party is promising in our round-up.

In the news, there’s also a significant ruling about redundancy consultations. And we look at the impact of the EU VAT regulations now they’ve been in place for four months.

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Key dates for your diary

7 May: General Election

The impact of EU VAT changes

It’s four months since the controversial changes to the VAT place of supply rules. The aim was to stop companies like Amazon from relocating to countries with a lower VAT rate in order to reduce their bill.

But it seems like the biggest impact was on small businesses. We look at the effect - and what might happen in the future.

Remind me - what changed?

From 1 January, all businesses selling certain services in the EU needed to charge VAT at the rate applicable in the customers’ home country. This affected a range of services from fixed and mobile telecoms, radio and TV programmes, through to music and software downloaded from the internet.

The big issue was that, unlike UK VAT, there was no threshold, so it affected everyone from sole traders and micro-businesses to the Amazons of the corporate world.

What’s been the impact?

Some businesses have managed the change well but for others, the sudden need to charge VAT, and all the administration that comes with that, has had a major effect:

• Hundreds of small companies have actually ceased trading as a result of the legislation
• Lobby group EUVATACTION says that “tens of thousands” of businesses are suffering
• Many businesses have stopped exporting to avoid the red tape involved

The European Commission vice-president for the Digital Single Market, Andrus Ansip, has said “We wanted to protect, but somehow destroyed, those businesses, so we have to somehow fix those problems.”

What changes might we see?

An evaluation of the legislation is scheduled for the middle of this month, just after the first quarter of VAT MOSS submissions.

MPs have been lobbying for change, with David Cameron raising the issue at the EU Summit in May and Liberal Democrat MEP Catherine Bearder sending a letter to the president of the European Commission asking for a review of the legislation.

There are a number of changes that could be introduced:

• A threshold: this would work like the UK VAT system, where businesses with a lower turnover would be exempt from paying VAT. While it seems like a simple solution, it would need to be agreed in all EU countries, many of whom don’t have an existing VAT threshold.
• Relaxation of recording keeping: the list of records needed is significant and they need to be kept for 10 years. David Cameron has asked for small businesses to be exempt from this requirement.

If it is agreed to change the legislation, when the updates may come through. Catherine Beader has said she believes changes could be announced this month. But Juliet McKenna of EUVATACTION has said that changes to legislation may not be fast and that “the timescale quoted has been anything up to 18 months”.

Guaranteed changes on 1 July

Whatever happens with the review, there will be some changes happening this summer. In the UK, businesses whose turnover is less than the UK VAT threshold and who are using the VAT MOSS system can use the information from their payment service provider to decide their customer is located.

But that changes on 1 July 2015, when they will need to capture the information through their own website. That is likely to have a further impact on smaller businesses, so the hope is that the review will help to reduce the administrative burden.

We’ll keep you posted on any developments as they happen.