Vat

[Steve Sherlock]

Hi,

Not so long ago Coverzones did some research into the sort of initiatives that people would like to see from the Government to help their business.

Unsurprisingly perhaps, the reduction in VAT was not particularly well-received – I can honestly say that as a consumer I haven’t noticed much of a difference, and from a business perspective, I don’t feel it’s been a raging success.

The people we spoke to felt that reducing national insurance and trying to help businesses deal with the level of debt they face would be much more beneficial. In any case, VAT is going back up to 17.5% in January 2010 – which means new adjustments for businesses and many decisions to be made around whether or not to raise prices in the New Year. Most consumers will probably be expecting prices to rise, so there could be an opportunity for businesses to really stand out from their competition by absorbing the rise and resisting passing it on.

What do people think? How do you plan to manage the rise? Do you think that the changes in VAT have had much of an impact upon your business – for better or for worse?

Steve

 

[Former Member 1]

The VAT decrease was a waste of time for me business wise. we're B2B only and most of my clients are VAT registered anyway... My core prices will rise by 18% in January to cover increasing fuel costs we've suffered over the past year and expect to have to continue to bear over the coming year...

As a consumer it made no perceptible difference to prices in the shops and will have a negative impact when it goes back up...

Far more effective generally would have been an absolute cap to on consumer interest rates across the board coupled to some fairly draconian sanctions against those who have 'ratejacked' customers or otherwise pushed people over the financial edge... That an measures to force banks to lend to the ptherwise viable businesses they HAVE been driving to the wall...

 

[Scottish Business Owner]

From a B2B perspective I agree with Matt it's made very little difference. Take into account the cost of actually having to amend systems etc for each vat change and I suspect it hasn't actually saved businesses money at all.

I dont think it's made any impact at all to either consumers or businesses, it wasn't well thought out and was actually quite expensive. I think we'll also be facing a 20% rate on certain items soon if what i've read is correct.

As far as this Vat measure is concerned it's all negative from me

 

[Gouldie0]

Hi,

I agree as well, why AD continued with the plan only he'll know. Realistically the consumer / business was never really going to prosper and by all accounts this was an expensive mistake.

My question would be, why should businesses absorb the additional 2.5% when we return to the 17.5% VAT rate? Why not pass that back onto the customer, it wouldn't make a great deal of difference.

As has suggested, i would expect an increase in the standard VAT rate for particular items very shortly. The current government, for what little time they may have left need to re-coup as much money as possible.

Kind Regards

Neil

 

[Gouldie0]

How many VAT registered businesses are members on SBF?

What are your thoughts around the return to 17.5% and any possible increases in the standard VAT rate?

Kind Regards

Neil

 

[Caroline]

I have a small vat registered business and sell both B2B & retail. The reduction in rate did nothing to help increase sales but caused a lot of work that I could easily have done without!

January is usually when my suppliers issue their new price lists and having received the first one see that they have increased some of their prices as well as passed on the vat increase. In my turn my sales prices will reflect these increases as I cannot absorb them & stay profitable.

 

[Mike Lewis]

I agree with what everyone has said about the VAT change. It certainly hasn't made any difference in my own business.

However ....

Take into account the cost of actually having to amend systems etc for each vat change and I suspect it hasn't actually saved businesses money at all.

I would respectfully suggest that, if there is a cost attached to amending systems for the VAT change, then there is something wrong with the systems.

Any half-decent invoicing or accounting system should be able to take a routine VAT rate change in its stride. It should be a simple matter of editing a single parameter field or something equally trivial. If it's more difficult than that, you probably need a better system.

Of course, re-issuing price lists, etc. is another matter.

Mike

 

[Caroline]

If it only affected my accounting system it would indeed have been very straightforward.

However, I also have a couple of websites (b2b & retail),some product on various sales portals, and as mentioned price lists (trade & retail) which need to be amended & issued (some by email, some snail mail) etc, etc.

It would be lovely if everything could be done at the touch of a button, but life ain't like that - well mine isn't anyway!

Caroline

 

[Gouldie0]

It depends on how your business advertises your product and service prices.

In your case Caroline i would say it's a pain in the you know what to amend all your pricing structures. My clients have also had a mixed experience, some it's just a case of updating a singular cell on a system, others it's more problematic.