Next, New Look and Matalan are among the fashion retailers planning to deduct the 2.5% VAT reduction at the till to overcome the ‘logistical nightmare’ associated with the Chancellor’s tax cut.
On Monday, Next, New Look and Matalan will all put posters up in store advertising that the reduction will not be reflected on the ticket prices but that it will be deducted at the cash desk and will show up on customer receipts.
New Look chief executive Carl McPhail forecasted that the strategy would be widely adopted by fashion retailers given its closeness to Christmas. New Look will add a 2.5% “discount button” to its tills on Monday.
On Monday the Chancellor Alistair Darling announced plans to cut VAT to 15% in an attempt to stimulate consumer spending. The VAT cut comes into effect on Monday - giving retailers just one week’s notice to implement price cuts.
The VAT cut received a mixed response from retailers, who said the price cuts would effectively only save consumers “pennies” and that it would cause them huge operational challenges in terms of price ticketing and IT systems at one of their busiest times of the year.
A statement from Marks & Spencer about its VAT reduction plans is due later today. A spokesman for Debenhams said that it was still in the process of deciding how best to handle the situation.