How accurate are VAT registrations as a measure of entrepreneurship? A spatial analysis of Scotland and its regions.

Comparing VAT registration data with Scottish Clearing Bank Statistics on new start-up activity we assess the extent to which VAT registration data reflect the general level of start-up activity in the Scottish economy for the period 2002–2009. Findings reveal that VAT registration data underestimate the general level of start-up activity by 39%. The data also reveal there is considerable spatial variation in start-up activity across Scottish regions and the recent recession has affected start-up activity irrespective of which measure is used. It is also clear, however, that the recession has affected the general level of start-up activity to a far greater extent.