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Tuesday
Jul202010

Retailers Unhappy About Possible Rise in VAT

I have been reading with interest reports about the potential for a rise in the rate of VAT recently.  It would seem that although many commentators believe there is a significant chance of this occurring, many retailers are against the move.

They feel that although the move would be done to help bring in more cash to reduce the deficit, it could well be that it has a negative effect on society and the economy.  Experts also fear that if VAT were to be changed to apply to items such as food – which are currently zero rated – it would hit a lot of people who are finding it hardest to get by anyway.

As far as the zero rated aspect is concerned, I have to agree.  But I do wonder how the Chancellor could find a way of bringing in more money if he does not raise taxes or the rate of VAT either.  VAT is seen by many as an optional tax – you have control over whether or not you buy an item based on its price.  You do not have that control over the amount of income tax you pay however.

Many retailers are however already prepared for the change in VAT which seems almost inevitable.  Their one demand is that adequate time is given to allow them to bring in all the changes.  This would be in direct contrast to the knee jerk reaction of the previous Labour government bringing in a temporary cut to VAT over a year ago, which caused havoc when it occurred.

If you own a business and you want professional advice concerning any area of VAT or VAT registration, contact us at St Matthew now.

 



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