I have mixed views about the VAT Changes recently announced by the Chancellor but on balance it’s too little and too late.
Of immediate concern to us is the impact it is having on Customers using our Expense Management Solution expense@work and also users of our Time Recording and PSA Solution time@work. The Support Desk has been inundated with calls from Customers who are concerned about correctly adjusting their Business Systems at such short notice.
The changes introduced will undoubtedly cost businesses precious time and money as they modify calculations and test the revised VAT Rates (15% from December 1) across their Business Solutions.
More generally, the changes in rates have little or no positive impact on most UK businesses (as they can reclaim VAT on purchases) and from the evidence on the high street, prices are already facing downward pressure with product pricing being calculated at levels which factor in the given VAT Rate (so a TV costing 199.99 today is likely to cost the same next Monday!).
The acid test will be the Coffee Shops. Watch the prices on Monday, if they have not dropped (they must charge VAT when you eat your Croissant instore!) then you know they are pocketing the 2.5%.