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Well it looks like as I write this that the chancellor may reduce the bit he likes to take for no involvement whatsoever in a repair or sale (VAT) perhaps to a suggested level of 15{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}.
Apart from whether this is a good or bad move for the country as a whole, I just wonder how if at all will it affect our industry? Also I wonder how and what others feel about this.
Nice to go back to a sensible round figure and nice to see the price we charge will be artifically reduced to the consumer. However, that will mean the shop floor price of a cheap product will come out cheaper, and I wonder if that is a good thing. Won’t reduce a thing for me, as I will buy cheaper yet sell cheaper, I will have a slightly smaller Vat bill on the difference but it is all relative.
Another thing is, a lot of people will stop buying for a few days to see if this actually happens, then it could be catch-up time.
I don’t mind seeing this happen, as long as it stays like that for a while, and not go up again in a few months, or worse than that, go to beyond the current 17.5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}
I remember when it went up last time under John Major’s stewardship. Worse than that I remember Denis Healey’s 2 teird structure, 8{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} on cooking products, as deemed to be a necessity, and 25{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} on all others as looked upon as a luxury item, and that included fridges. Prior to that was set by Ted Heath in 1973 at 10{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}
Alex
Re: Rumour/Proposed Vat drop
Well…
I reckon that a bit can be given back after all the stealth taxes we’ve put up with that aren’t really stealth taxes, or so the spin machine says. :rolls:
Or there’s the “green” taxes spent on leading the way for change on environmental issues like schools, the NHS etc.. I mean, call it what it is for goodness sakes, an extra tax, not wrap it in some “we’re saving the planet” wrapper ’cause, it ain’t.
Trouble is that, like you obviously Alex, I take the view that it will make little difference really in the real world as the difference on the VAT return is liable to be minimal at best.
For consumers it looks like a lower price but I doubt it will offset the price increases we’ve seen in recent months and, dare I say it, some will take the opportunity to up their prices by 2.5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} anyway. Or maybe I’m just a cynic.
K.
Re: Rumour/Proposed Vat drop
I would prefer it to stay at the 17.5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} rate for two reasons
Firstly we will have the hassle of two different VAT rates in one quarter ( I can hear my accountant chuckling ):lol: and second but most the most important reason is suppliers will stealthily raise their prices,..Call me a cynic
JohnRe: Rumour/Proposed Vat drop
If this does happen, when would it take effect? surely it would be a logistical nightmare to impose the new rate from, say 6pm tonight but if its done from a date in the future no one is going to buy anything at all until that date cancelling out the desired encouragment to spend. Can anyone remember when the rate changed before and how it was carried out?
and can our accounting software cope with a rate change mid month yet alone mid period or even mid financial year?Re: Rumour/Proposed Vat drop
Further to the accountancy concerns. Two rates can usually be set on most packages, and as long as you keep an eye on the dates, should be seemless. That includes purchases as well as sales.
What you will get though is insurance companies and manufacturers who will also be keeping an eye on dates & rates, and you will need to be on the ball or expect some rejections.
Last time (1989) wasn’t too bad and we were doing accounts by hand on ledgers in those days.
Personally I think it will only paper over the cracks, and as Ken says some will jump onto the opportunity to up their prices.
Alex
Re: Rumour/Proposed Vat drop
have a look at the robert peston blog on the bbc. he talks of a possible rise to 22{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} to pay for borrowing. however things turn out I cant see it doing much for us in the long term.
wilf
Re: Rumour/Proposed Vat drop
My Optician tells me that for years he has had to deal with about five VAT rates on Glasses and Eye Care Products, so with only one or two we have it easy .
Re: Rumour/Proposed Vat drop
Alex wrote:
I remember when it went up last time under John Major’s stewardship. Worse than that I remember Denis Healey’s 2 teird structure, 8{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} on cooking products, as deemed to be a necessity, and 25{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} on all others as looked upon as a luxury item, and that included fridges. Prior to that was set by Ted Heath in 1973 at 10{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}
Alex
Good grief, how well I remember those days. 25{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} Vat on all whitegoods & service except cookers.
It dealt the UK whitegoods industry a severe blow from which it never really recovered. The 1970’s saw large numbers of redundancies throughout the industry partly as a result of this huge tax hike..
The other thing that bugs me is people claiming this is the first reduction in Vat, its not even the first reduction in the base rate as Alex said it went from 10{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} to 8{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} except for most of our industry which copped the full 25{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}. 😥
Imagine going to a customer who was on a Hotpoint Owners Club service contract to do the annual renewal.( one of the only ways you could make any bonus in the bad old days) 😉 If they took advantage of the reduced price when the machine was under 3 months old they got it for under £10 for an automatic. 12 months later and after the huge increase in VAT the premium jumped to over £25.00 a hell of a big rise over 35 years ago.
People cancelled contracts in large numbers. 😥
Jim.
Re: Rumour/Proposed Vat drop
Well it is official the Chancellor announced a cut to 15{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} starting from December 1 lasting for 13 months before returning to the present level of 17.5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} on 1/1/2010
Oh joy, must run out now and buy a new home cinema 😆
John
Re: Rumour/Proposed Vat drop
We had customers on today, before lunch, asking when the VAT was being dropped in the shop! :rolls:
Some people are just too stupid to be allowed out without supervision I think. 😉
K.
Re: Rumour/Proposed Vat drop
johnmac11 wrote:
Oh joy, must run out now and buy a new home cinema 😆
JohnNot worth it, suggest you go for a Kitchen from MFI. 😉
Alex
Re: Rumour/Proposed Vat drop
What I think is that the Chancellor is just tinkering with numbers, nothing that has been proposed is going change very much, in fact when you look behind what has been proposed it all adds up to More Tax increases for us all. NI up and the small Business with staff is going to be feeling the consequences of this when it is implemented ! Fuel Up ? Benefit Payments up ?
Are they Rocket Scientists ? or are they idiots ? the numbers are staggering and its now official the UK economy was ill prepared for this and was in trouble long before the issues with the banking system arrived.
Its gonna be a rocky ride and we all need to hang on, the govement modus operandi is simple, Tax, Tax and More Tax on the working folks of this once great nation.Re: Rumour/Proposed Vat drop
Well on the positive side the 2.5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} reduction in VAT will show some difference (albeit small) for the average ‘call-out fee’ and high cost spare parts pricing. A £45 call-out fitting a £50 part plus VAT will be £2.38 cheaper as of Monday…..oh yes!!!!
No big deal you may say, but at least it’s cheaper and more appealing for our customers who after all said and done are our only paymasters. 😉
For hundreds of sole traders like me who aren’t VAT registered the news is’nt brilliant. We get 2.5p in the pound off our spares and petrol from Monday and the savings can be ploughed back to the exchequer to pay for the hike (2p per litre) in fuel duty which also kicks in on Monday.
But be of good cheer, let our joy be unconfined, lets hear it for our chancellor …hip!..hip! 😕
Meanwhile, lets all shut up shop, spend the next few days repricing our wares in readiness for the grand reopening on Monday morning. The great December give-away….Alistair is a Darling and so say all of us…! 😈
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