BGN Entrepreneur

The VAT cut in Britain was generous, costing the Treasury about £1 billion a month lost revenues, or an estimated £12.4 billion over the period of reduction. Recently, the UK’s largest retailers attacked the Government over fears that the timing of VAT being returned to 17.5 per cent would cause huge disruption during the Critical Christmas trading period.
The increase from 15 per cent, will come into force at midnight on New Year’s Eve, and a number of important retailers have urged the Government to postpone the tax rise by a month, until the high street is quieter.
Executive chairman of Marks & Spencer–Sir Stuart Rose, said that increasing VAT on New Year’s Eve is an insane time. The tax rise is at tthe worst possible time, which is right in the middle of sales period.
A Treasury spokeman said that the policy to return VAT was unchanged, and exactly as detailed in Pre-Budget Report last November. But the timing of the rise in tax , which is levied on most goods and services but not on food, is expected to spark chaos for retailers at their busiest time of the year. They’ll need to recalibrate their pricing models and tills, and there are fears that it will also knock post-Christmas sales and advertisement out od kilter. It is feared that shoppers will be reluctant to buy funiture and electrical items, typically on sales after Christmas, once they become aware of the 2.5 per cent rise in tax on New Year Eve.
The British Retail Consortium, the trade body, is also urging the Treasury to delay the VAT increase.

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