Consumer Businesses Scramble For VAT Advice

The 2.5 per cent cut in VAT announced in Monday’s Pre-Budget Report has led to a huge level of calls for support from retailers and other consumer businesses.  Deloitte, the business advisory firm, set up a VAT/IT Hotline at 9am this morning and has received an average of 30 calls per hour from clients seeking help.  The vast majority of these calls are coming from retailers and other consumer facing businesses.
Conrad Young, Head of tax management consulting at Deloitte, said: “The main driver for the level of calls appears to be the fact that a lot of technical guidance has been released, and with such a tight timeframe, many callers require quick answers to deal with the practical issues in implementing the changes.”
Tarlok Teji, UK Head of Retail at Deloitte, said: “The majority of clients we have spoken to about this cut say it is not particularly helpful.  A 2.5% cut in VAT is going to generate very few additional sales, especially when you consider the discounting that is already underway.  Consumers are savvy enough to recognise that on many low and medium cost items, the difference is pennies or a few pounds.  Even on big ticket items such as new cars it is questionable whether it will make a big enough impact. It is probable that the increased costs in terms of staff time, updating IT systems, arranging in-store promotions and changing pricing tickets will be greater than any benefit seen from increased sales.”
Simon McBride