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Govt should delay reintroduction of VAT rates, BRC
09
Mar '09
The Chancellor should use his Budget to announce he will delay the VAT increase by a least a month from its current due date of 31 December, said the British Retail Consortium (BRC).

The retailers' organisation is warning Alistair Darling he has chosen the worst possible time of year to impose the huge task of reversing last year's VAT cut. December is the busiest period for most retailers. It cost the sector around £90 million to implement the cut to 15 per cent and, because of the timing, will cost a similar amount to reintroduce the 17.5 per cent rate.

The call to delay the VAT increase is part of the 'Turning the Corner' recovery plan contained in the BRC's Budget submission, which is published (Monday).

The BRC is also calling for an immediate freeze of new business rates burdens, as part of a package of measures to preserve and promote retail opportunities.

Stephen Robertson, BRC Director General, said: “Retailing is facing the toughest trading conditions in decades, with predictions of 15 per cent of shops closing and up to 200,000 job losses.

“Retailers don't want handouts, but we can't cope with increasing Government-imposed handicaps. Retailing is at the heart of every local community, providing one in nine UK jobs. The Government must work with us to protect these jobs and promote new opportunities.”

Postponing the reintroduction of the 17.5% VAT rate
Despite less than a week's notice at their busiest time of year, retailers worked extremely hard to ensure the VAT reduction was passed onto customers on time.

It cost the industry around £90 million to make the changes last December. It will cost a similar amount to change the rate back to 17.5 per cent this December - again at the busiest time of year for most retailers and when the economy is unlikely to be in significantly better shape than now.

To minimise the disruption and confusion, the BRC is calling on the Government to postpone returning VAT to 17.5 per cent by at least one month to the end of January 2010.

Stephen Robertson, BRC Director General, said: “Changing VAT rates back to 17.5 per cent at the end of December will soak up a lot of effort at the busiest and most important time of year for most retailers. For some shops post-Christmas sales are 50 per cent above normal – so it's a time when staff should be focusing on serving customers. Re-pricing is very labour intensive. The need for overtime and bank holiday working will make it a costly distraction for retailers. The Government should postpone the reintroduction of the 17.5 per cent VAT rate by at least a month.”


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