VAT Attack: Deep Joy

Congratulations to Her Majesty’s Government on giving us a major accounting headache in the run up to Christmas.

Lovely idea in principle: VAT, in my not so humble opinion, is nothing but legalised theft anyway, but that’s another story. Now we face the fun of selling everything that we bought in before Dec 1st at 17.5% VAT at the new rate of 15%; and all those things so carefully priced by the manufacturers with an ex-VAT price to give a nice, rounded inc-VAT price suddenly become silly prices:

  • Bar of chocolate: was £1.30; will be £1.27
  • CD: was £14.99; will be £14.67

Deep joy.

Books, of course, are zero-rated so book prices are unaffected.

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6 thoughts on “VAT Attack: Deep Joy

  1. Well, here’s a starter for ten! We have made a decision that we are NOT going to pass this on to the customers- unless they have they ask! We run the Merlio system, so the change to the ‘output’ tax should be the work of clicking a few buttons, which will keep the CPOS prices the same, but reduce the amount of VAT we declare to 15%. I have added below the ‘Point of Sale’ we are putting up, which should be fairly self-explanatory. SO- what is everyone else going to do?!

    Pre Budget Report 24th November 2008
    Temporary Reduction in the
    Standard Rate of VAT from 17.5% to 15%

    Our customers will be aware that the government has reduced the standard rate of VAT from 17.5% to 15% from Monday 1st December 2008 for a period of 13 months. Like many small retailers, we have had to investigate the best way of dealing with this reduction. Many of the products we sell are ZERO rated, and this change does not affect items such as books. Of the VATable items we sell, many are of low value, and the change in price is minimal.

    For example-

    Card priced at £2.00: VAT at 17.5% is 30p. VAT at 15% is 26p. Difference = 4p

    CD priced at £15.00: VAT at 17.5%= £2.23 VAT at 15% is £1.96 Difference= 27p

    We are sure you will understand that there would be significant staff time & material expenses involved in re-calculating and re-pricing each single item in the store. Our decision, therefore, is to leave the marked prices of VATable items as they are.

    However, given that our till system calculates exactly how our sales are broken down over the course of each day, we know the total amount gained from not re-pricing our goods.

    As a registered Scottish charity, this ‘extra’ 2.5% will be re-directed towards our charitable aims of Christian mission and church planting in various parts of the world.

    For each VAT quarter while the temporary reduction is in effect, we will publish the amount we have transferred from your purchases to our work of spreading the Good News.

    Of course, should you wish the reduction in VAT to be passed onto you, please let a staff member at the counter know, and we will arrange for the appropriate amount to be refunded from your total purchase price.

    Please do not hesitate to speak to our manager, Andrew Lacey, if you have any questions on this policy.

    Scotland’s leading independent Christian Resource Centre
    The Bookshop is a Business Ministry of Gospel Literature Outreach.
    Surplus income from the bookshop is used in the work of spreading
    the Good News of Jesus Christ, supporting GLO workers and Teams all over the World.
    We work in partnership with other national GLO organisations.
    Registered Scottish charity- no SCO07355

  2. How are you going to differentiate between those goods in your store that were there before Dec 1st and those which arrive in the days and months after that date which will then be at the correct VAT amount?
    Why oh why didn’t the chancellor leave the VAT untouched and give everyone better personal allowances.

  3. Because the Lord bless hasn’t blessed him with sufficient wisdom? Or because he’s a prize plonker who isn’t in touch with the real world? Probably both. Lord have mercy: I certainly wouldn’t want his job.

  4. And here’s Amazon’s answer to the problem: Get the new VAT rate now! Complete with a handy little discount calculator:

    Why a 2.13% discount and not 2.5%?

    A perfectly reasonable question, with a slightly complicated answer, so we’ll do our best to explain.

    The current VAT rate is 17.5%
    The new VAT rate, from Monday 1st December 2008 will be 15%.

    As an example this means:
    – A product selling for £10 has a price excluding VAT @ 17.5% of £8.51
    – If you apply the new VAT rate of 15% to the price excluding VAT (£8.51), it gives the new price of £9.79
    – The new VAT rate equates to a saving of £0.21 (£10 – £9.79 = £0.21)
    – This equals the same as taking 2.13% (or 21p) off the original £10 price

  5. I would like to see the estimated cost in staff time (calculating, repricing, explaining to customers, handing out fiddly change etc), banking costs (more change needed?), reprinting POS materials, leaflest, brichures etc, web site changes and all the other expenses for UK retail.

    I think it is a safe bet to say that this will cost the economy more that it will put it. And it is especially ridiculous with many large high street stores offering discounts of 20% or more already!

  6. As I understand it, the issue relates to items SOLD after start of trading on the 1st December. Certainly with Merlio, the change is simple within the VAT code editor on Monday morning. Saturdays till receipt/end of day summary print outs will show VAT at 17.5%, Mondays at 15%.

    As far as ‘imput’ VAT goes, we simply gather up the figures from suppliers via SAGE, and will claim the total amounts back as usual, whether 17.5% or 15%.

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