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VAT Reduction

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VAT Reduction

http://news.bbc.co.uk/1/hi/uk_politics/7746188.stm
Quote
VAT to be cut from 17.5% to 15% from next Monday for 13 months. The chancellor urges retailers to pass it on as soon as they can.

Is the rate of VAT or the charging of it optional. I must have got it wrong.
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112 REPLIES
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Re: VAT Reduction

It's not optional, the retailer will make more money if they don't reduce their prices by the 2.5% or so.
Can you imagine all the companies running out an re-ticketing items for a 20p reduction? Me neither.
Tis a joke and doesn't hit the most important things such as food or fuel.
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James
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Re: VAT Reduction

Not sure if you guys have seen, but we've posted this tonight:
http://community.plus.net/blog/2008/11/24/vat-changes/
pd
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Re: VAT Reduction

Retailers traditionally like prices like £19.99 or £99.99 - they are not going to change them to £19.49 or £97.49 !!
pd
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Re: VAT Reduction

My point is would it not be illegal to continue to charge 17.5% VAT when the official rate is 15%.
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Re: VAT Reduction

Yes it would, but the consumer end price doesn't have to change, just the bill/receipt and slice that goes to pay for the NHS etc..
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Re: VAT Reduction

So the
Quote
The chancellor urges retailers to pass it on as soon as they can
statement in my opening post is a bit irrelevant as it would be illegal not to.
Maybe it should be "The chancellor advises retailers that they risk prosecution if they do not pass on the decrease"
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itsme
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Re: VAT Reduction

Quote from: Strat
My point is would it not be illegal to continue to charge 17.5% VAT when the official rate is 15%.

As been pointed out in other post the final price will not change but the slice that go back to the government. An example of this will be restaurants and takeaways. Do you think that they will all go out and have the menus reprinted?
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Re: VAT Reduction

Don't you think people will be watching out for net price hikes....a clue being the price being the same as last week. Wink
My god your a cynical lot Cheesy Wink
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Re: VAT Reduction

Yeah I think so, just like him asking to pass the bank rate cut on.
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Re: VAT Reduction

...but as we all know the Bank of England bank rate bears no relation to the real world we live in Crazy
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Re: VAT Reduction

Too true, but then I think most politicians don't live in the real world we do either..
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Re: VAT Reduction

Quote from: Strat
My point is would it not be illegal to continue to charge 17.5% VAT when the official rate is 15%.

Not necessarily, Strat.   If a retailer buys 1,000 units at 17.5% vat  on 1st of month, he pays that rate of VAT for the goods..... normally, he will mark up his prices, to reflect his profit margin, and then charge the customer (you and me) vat on top..... this charge is gobbled up by HMC&E....
If he has sold 500 units, then the remaining 500 units have still got the burden of 17.5% vat and the original mark up (profit) so he is entitled to sell them with 17.5% vat. (I think)  when he has sold the remaining 500 units, and re-orders, he will be charged the new rate and the system goes on....
It all depends on the date of purchase, and the date of sale.. how they "account" for the vat to HMC&E
itsme
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Re: VAT Reduction

Wrong. At the point of the sale the retailer has to charge the current VAT rate.
Why some retailers will not pass on the reduction is it require all the price labels to be changed, reprinted. So what can and will happen is that the net price will be increased by 2.5% so the gross price stay the same.
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Re: VAT Reduction