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New Year’s VAT increase
It’s not going to go away. At midnight on New Year’s Eve, VAT rates resort to 17.5%. This is an issue that must be addressed in good time, as forward planning will save you both time and money in the New Year if your tills are not prepared for the change.
“UK businesses need to look sharp, think ahead and plan efficiently now in preparation for the change or face starting the New Year with an enormous administrative hangover,” said Justin Hollins, director of business development at Clarity Retail Systems.
In a government impact assessment, it estimates implementing changes to VAT in time for January will cost millions in administration fees as businesses align themselves with the old rate of 17.5 per cent. An outlay that could be repeated if the rumour is true that, should the Conservatives gain power at the next election, they plan to increase VAT to 20 per cent – a rate that could take effect within weeks of a victory.
To help prepare for the imminent increase, Justin recommends the following for consideration:
- Communicate, Communicate, Communicate
Speak to your staff and explain what your procedures are for the change and determine their role (if anything)
- Update all price lists and promotional signage that show the VAT rate. Failure to do so will cause confusion among customers and give the impression that you are inept
- 24 hour businesses must decide how and when to change the rate. HMRC has announced special arrangements for these businesses to account for 15% VAT on takings received up to whichever is earlier – either the end of trading or 6am on 1 January 2010.
- Talk to your EPoS providers today.
Discuss with them what needs to be done to your systems and how they can help. Can you configure the rate change in advance and have it automatically activate at midnight? Can you make the change yourself or do you need someone to come in to do it? And if so, on New Year’s Day, is it too expensive?
- You will need to change the rate on receipts.
Which system issues these?
- Don’t just think about your POS.
Which other sales channels do you use: websites, kiosks, phone applications, hand-held terminals, etc
- Use the change to your advantage by running promotions, for example, ‘last chance 15% VAT saloon’, etc.
- Consider your own costs
Can you make savings by making bulk purchases before the New Year?
- If you cannot make these changes, or there is a cost that is too great to bear on the night or on 1 January, then make a statement that you will continue to offer the reduction as a discount and promote that you are ‘VAT Friendly’. Just make sure you keep a record of your full VAT commitment.
For more information on the VAT change visit HMRC.
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Inside this issue
With the festive season nearly upon us, now is the time to check that all is planned and ready both to embrace and benefit from this particularly busy time of year. Read more >
Britvic’s 2017 research into the importance of soft drinks at Christmas revealed that almost half of consumers (45%) were set to buy more soft drinks at Christmas and over a fifth (21%) planned to drink less alcohol. Read more >