vat rise

Half of Small Businesses Forced to Absorb VAT Rise

Nearly half of small firms have been forced to absorb the costs of the VAT increase to remain competitive, research from the Federation of Small Businesses (FSB) has found. The FSB survey of 1,600 small businesses revealed that 48 per cent would be absorbing the costs of the January VAT rise with the remainder passing it onto their customers. FSB spokeswoman, Prue Watson, said that SME which try to absorb the cost will have to look at their books and see where they can cut back elsewhere. “For example, they might reduce their marketing or try to do it more cheaply.” “However, many small firms don’t have the leeway to do this. More than half are adding the extra VAT to their prices, which could put consumers off buying from them, and ultimately that will hit their cashflow... »

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 Conso... »