Changes to VAT in the United Kingdom
The Standard Rate of VAT in the United Kingdom is changing from 17.5% to 15%. This change will be effective from 1st December 2008 to 31st December 2009.
EROL store owners will be glad to know it is simple to change the VAT level in EROL.
How Does it Actually Affect Those Running Small Businesses?
2.5% doesn’t seem like much of a change, and whilst I don’t think it is enough to warrant me buying that much ‘needed’ Flat Screen TV, it will surely make an impact on the larger scale.
This change is inconveniently timed for small business owners: a great number of small businesses are now having to rush around, making changes to their prices in time for the adjustment on Monday 1st December 2008. Obviously, this is not what they want to be doing – in what is the first week of the Christmas order rush.
Christmas campaigns, planned and put into action months ago, will now have out-of-date prices (think brochures, displays and other promotional items – now all with the incorrect price). One EROL customer who owns a boutique store faces the challenge of re-creating 3000 price tags over the weekend – all of them handwritten.
The question most store owners are asking themselves is ’should we bother passing it on?’. While the Chancellor ‘urges’ retails to do this, those who have bought in stock ready for Christmas and have paid for that stock at the 17.5% rate will think they have to keep the 2.5% to cover costs.
Those with bespoke shopping cart systems who have already paid a considerable amount for their system could now find they have to pay again to change the VAT rate. This is because VAT rate has been ‘hard-coded’ into their custom software – having the VAT value ‘hard-coded’ into the shopping cart system means it will cost the store owner time, effort and money to hire a web-developer to change it to the new 15% rate. Lesson learned: don’t hard-code the VAT rate into your online store.
