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Government mulls concession on VAT

The Government is to consider granting retailers extra time to update price labels in stores when the VAT rate reverts to 17.5% on January 1.

The Government will consult on an amendment to the Price Marking Order, which could give retailers more time to change labels following the VAT hike, which will impact the industry at its busiest time of the year.

Under current law retailers have two weeks to adjust prices following a change in the rate of VAT.

“Repricing tens of thousands of items is a mammoth and costly task and it has to be done during most retailers’ busiest and most commercially important time of year”

BRC director of business environment Tom Ironside

The British Retail Consortium (BRC), which has been campaigning for extra flexibility on the enforcement of the period, welcomed the move.

BRC director of business environment Tom Ironside said: “This is a welcome indication that the Government could give retailers the extra flexibility we’ve been calling for.

“Repricing tens of thousands of items is a mammoth and costly task and it has to be done during most retailers’ busiest and most commercially important time of year – a time whenstaff should be focused on serving customers.

“A situation where some ‘old’ shelf prices may be less than the ‘new’ price a customer is asked to pay at the till could be more difficult than last December’s reverse scenario.

“Retailers will be doing their utmost to get the job done as quickly as possible. But I urge the Government to follow through on this consultation and ensure retailers have the time they need and aren’t unfairly penalised while this work is being carried out.”

Readers' comments (3)

  • Just as before all the 'big boys' will use the change as a nice marketing tool, quoting " we'll not charge you the 2,5%" whilst the small indies struggle to find the time/manpower to make the changes to comply.
    The whole thing has been geared towards manufacturing and these 'big boys' with absolutely nothing saved for the small businesses such as ourselves, infact it probably cos us more in time and adjusting prices/tills/websites than we saved.

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  • The VAT change was always a desperate political measure by a Government which does not understand business. It is a Government staffed mostly by people who have been "professional politicians" since they left uni, with token business types like Alan Sugar chucked in to try and make it look respectable.

    The original VAT change had no real effect on consumer demand - putting VAT back up at the worst possible time of year almost certainly will unless retailers absorb the pain.

    It is economic nonsense from start to finish.

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  • "The original VAT change had no real effect on consumer demand - putting VAT back up at the worst possible time of year almost certainly will unless retailers absorb the pain."

    Well said, it is mad to do this when we are still in a recession, in fact far deeper than what was imagined

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