Reported on Tue, 07 Mar 2006

Charity shops and the tax benefits they receive represent a real threat to high street small and medium-sized enterprises (SMEs), a new report has claimed, but a business loan could allow significant investment to be made.

The Forum of Private Business (FPB) believes that a new flurry of professional charity shop selling goods are in direct competition with SMEs and should no longer be given tax breaks.

Victoria Carson, campaign manager for the FPB, explained that although the actions of charity shops should be supported, SMEs were finding it difficult to compete with both major charities and large retailers.

"Small businesses are becoming increasingly frustrated with the new style chain charity shops which are actually more like businesses with the buying power of a major retailer," she said.

"The line has become blurred. Many charities like Oxfam and Sue Ryder are now aggressively competing in the commercial market place employing professional staff selling a range of new goods."

She added that charity shops enjoy tax reductions of up to 80 per cent on mandatory business rates, while SMEs are forced to pay rent and corporation tax.

Ms Carson concluded that if the government does not move to protect the interests of SMEs then the UK economy is likely to be seriously affected, with over 280,000 independently owned high street shops facing closure.

"It must not be forgotten that last month a group of MPs warned that unless high street shops are protected they will have disappeared by 2015," she said.

"Sadly charity shops are now adding to that pressure. Small businesses, as the engine room of the UK's towns, villages and cities, must be supported and protected by the government locally and nationally."

A business loan could represent a way for SMEs on the high street to invest in new areas to ensure survival and encourage growth.

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