VAT / Shops question?

[srebbe64]

When I go into M&S or NEXT or Debenhams etc... I notice that a lot of the products for sale are rounded up or down to, say, £5 or £10 or whatever.

Now that VAT is being reduced is the Government really expecting these retailers to reduce their prices by 2.5% and thereby have to re-price/re-package everything? I'm thinking it's going to cost more than 2.5% for the retailer to faff around!

[s,one]

I'm sure that the Vat reduction will only be shown in real terms on large expenditure items. ie new cars fridges diswashers etc. As you say to much dicking about for retailers, but I'm sure this will be a pre-christmas springboard for sales which include revised rates.

[zcacogp]

Not to mention the fact that retailers are only "Encouraged" to pass on the rate cut. When? "As soon as possible".

So. Mr Retailer is looking around his store of things for sale, and knows that updating his systems to ensure that the rate cut is passed on will cost him quite a lot of time, and quite a lot of money. Oh, and he will then have to go 'round the whole store, reducing the listed prices on every single item.

OR he can leave everything as it is, not change a thing BUT only have to pass on a VAT uplift of 15% instead of 17.5% when it comes to doing his VAT return, thus making his profit margin a bit larger. Not much, admittedly, but he also knows that the odd few pennies off the items in his shop wouldn't be noticed by the customers anyway, so why bother to remove them? And times are hard, and he needs to feed his family ...

So what do you think Mr Retailer is going to do?

Exactly.


Oli.

[Graham]

GOVT is living in LA LA land.... they obviously havent noticed that most things in the high street already have upto 20% off, so the vat ( which is actually about a 2.1% price reduction) is going to make a huge difference, and as you say I cant see many shops re-pricing..

[mel]

Of course they'll all pass on the savings to the consumer, I mean the government have told them to and everything, I noticed yesterday that "The Pound Shop" in town was having new signage installed and had changed it's name to "The 97.87 Pence Shop"

[Vipers]

And if the government thinks the reduction of 2.5% VAT will entice people to spend, they have their heads where the sun dont shine.

Spend £1000 and save £25, oh yes that will get joe public spending like its going out of fashion.

Have they lost sight of the increase in gas, electricity, food, petrol, mortages, road tax, train fair's, bus fare's but to mention a few increases this year, be honest, do any of our readers on here really think they will even notice the 2.5% reduction?

[superkartracer]

It gives a little slack too bussiness rather than consumers, we won't pass the 2.5% on, in-fact we are increasing prices by the week!.

[catso]

Plus, given the fact that transportation costs will go up rather than down due to the VAT decrease/fuel duty rise, it's hardly an incentive to 'slash' prices......

[blindswelledrat]

Good point.

[bigTee]

mel said:

Of course they'll all pass on the savings to the consumer, I mean the government have told them to and everything, I noticed yesterday that "The Pound Shop" in town was having new signage installed and had changed it's name to "The 97.87 Pence Shop"

[Deva Link]

...and yet it's going to cost £12.5BN. It's beyond insane.

[scoobykev15]

everyone has forgotten that most stock that retailers hold has already been bought in and vat paid at 17.5 per cent,so are retailers expected to take the hit with the vat cut? fair enough ,goods we order in after december 1st should be charged out at the new rate but what about the existing stock that retailers hold on our shelves? i know one thing is certain,retailers wont be able to claim the difference back from the government.

[mel]

What are you talking about?

They bought it in at cost+VAT @ 17.5% and they are selling it at cost+margin+VAT @15%, they will be vat registered so CLAIM BACK the VAT element on the buy in price or rather off set it against the VAT element of the sell price which they pay to HMC&E? I don't see where you've got the idea that a retailer will be dipping out from?

[mel]

Oh and lets be honest, very little thats sold in our shops is actually made in the UK anyway so most of it will be imported.

[Vipers]

mel said:

made in the UK

Wots that mean then.... do we make anything in the UK