Will Retailers get More Time for VAT Rise?

Will Retailers get More Time for VAT Rise?The Government is considering extending the current 14-day period retailers have to re-price their goods following a VAT change, so that they have more time to prepare for January’s return to a 17.5% rate.

A consultation has been launched on whether to amend the Price Marking Order so that retailers have 28 days to change their price labels when the rate of VAT increases from 15% to 17.5% on 1 January 2010.

Currently, retailers are obliged to change the price labels on all their products within 14 days of a VAT change, or risk prosecution.

“When the reduced rate of VAT was introduced last December, customers and enforcement bodies were prepared to tolerate differing prices being charged at tills from those shown on the shelf or on item labels,”

said a British Retail Consortium (BRC) spokesman.

“Obviously, this was because the prices charged were lower than the relevant pricing label.

“However, the situation will be reversed from 1 January, with the potential for higher prices being charged at till points than are shown on items or shelves. We are extremely concerned that both customers and enforcers will be much less likely to tolerate such an arrangement.”

The BRC’s director of business environment, Tom Ironside, added:

“The consultation is a welcome indication that the Government could give retailers the extra flexibility we’ve been calling for.

“Re-pricing tens of thousands of items is a mammoth and costly task and it has to be done during retailers’ busiest time of year — a time when staff should be focused on serving customers,” he said.

Under existing legislation, retailers can use general notices in their shops to inform customers of the price changes, until the end of the 14-day period when they are obliged to have changed every price tag to reflect the increase.

If a customer complains that the price on the product is different from the price charged at the till during the 14-day period, the retailer will not be prosecuted, providing they have displayed a general notice.

The Department for Business, Innovation & Skills (BIS) said that it has launched the consultation because many retailers had difficulty making the 14-day deadline when the VAT rate was cut last December. The consultation will end on 23rd November.

Visit the Department of Business, Innovation and Skills website to access the consultation.

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