But it has certainly managed to confuse a number of businesses and consumers, with the VAT rate change of last year and the imminent return to 17.5% from January 1st 2010.
This whole episode has caused much debate – has the reduction had the desired effect and boosted consumer spending? - should the temporary 15% rate have been left in place for longer? – Should the rate in fact be increased to 20% or even higher to boost the government coffers? Whatever your views are, if you are in any line of business you may well have to make a change to one or more of your underlying systems.
Hopefully, if you are reading this in the run up to Christmas you will by now have thought this change through - if not you may have some work to do so that you are ready in time for the new year! Even if you have not considered this change yet and find yourself with a bit of unscheduled Christmas work in your Accounts system for example.... think of retailers (and hopefully you are not an unprepared one of these).... as retail customers are less likely to be patient with an apparent price change at the point of sale, if that change is an increase rather than a decrease. A year ago some retailers were caught on the hop slightly (not much notice given by the government to be fair) but at least any price changes then were in favour of the customer! Another interesting one is pubs and clubs serving VAT rated goods as New Year's Eve becomes New Year's Day. The same drink could instantly cost more as Big Ben chimes, although I believe that common sense has prevailed here and certain businesses have dispensation to only alter their prices from 6am on New Year’s Day.
As regards your own systems, think about the following;
Identifying which date the transaction relates to (the 'tax point' in other words) can also be problematical. No time to explore this here, however guidance is available from the HMRC website.
Anyway, if the above has not given you too much pause for thought, or too much work to do... think of the change from the consumer perspective and perhaps bring forward that major purchase to avoid the extra charge.
Niall
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