To ask the Scottish Executive what the (a) start-up and (b) failure rate was of small businesses in (i) Edinburgh and (ii) Scotland in each of the last 10 years.
Data on the number of VAT registrations are released annually by the Department for Business Innovation and Skills (DBIS). These figures are used to monitor the number of business start-ups. The latest available data refers to all VAT registrations taking place in Scotland in 2007. Please note that these figures do not account for all business activity as only companies with a turnover above the VAT threshold are required to register.
The VAT registration rate in Scotland has remained relatively stable over the last 10 years. However, the registration figures for 2007 have increased substantially since 2006 and are the highest since the series began in 1994. It is likely that these figures partly reflect the impact of changes in tax rules in April 2007 surrounding managed service companies (MSC). We would not anticipate that the higher level of registrations seen in 2007 will be sustained once the business behaviour in response to the tax rule change diminishes.
Data and further information on VAT registrations can be found on the DBIS website at:
http://stats.berr.gov.uk/ed/vat/.
(a) Table 1 shows the rate of VAT registrations per 10,000 resident adults in both the City of Edinburgh local authority area and Scotland from 1997 to 2007.
| Year | City of Edinburgh | Scotland |
| 1997 | 40 | 30 |
| 1998 | 40 | 29 |
| 1999 | 35 | 28 |
| 2000 | 38 | 27 |
| 2001 | 35 | 27 |
| 2002 | 33 | 27 |
| 2003 | 36 | 29 |
| 2004 | 37 | 29 |
| 2005 | 36 | 28 |
| 2006 | 37 | 28 |
| 2007 | 40 | 35 |
Source: DBIS
Businesses de-registering from VAT do so due to closure or because turnover has fallen below the registration threshold. However, this does not necessarily mean the business has failed (i.e. lead to bankruptcy or insolvency proceedings).
(b) Table 2 shows the rate of VAT de-registrations per 10,000 resident adults in both the City of Edinburgh local authority area and Scotland from 1997 to 2007.
| Year | City of Edinburgh | Scotland |
| 1997 | 28 | 25 |
| 1998 | 30 | 25 |
| 1999 | 33 | 25 |
| 2000 | 30 | 25 |
| 2001 | 30 | 25 |
| 2002 | 31 | 25 |
| 2003 | 32 | 24 |
| 2004 | 27 | 24 |
| 2005 | 28 | 23 |
| 2006 | 27 | 22 |
| 2007 | 27 | 23 |
Source: DBIS