Who is passing on the VAT Rate Cut? A "Name and Shame" Thread

mrkbrrws

Poundland - Will keep prices at £1 per item for "customer simplicity"

That's not really fair calling them a "baddie" just because they didn't fancy re-branding as Ninetyeightpenceland! :rotfl:

clunkfaeoffshore

In defence of some very small retailers, if they are on the "fixed rate scheme" for VAT, they are being expected to pass on a 2.5% cut in VAT, when what they pay to HM Customs and Excise has only been dropped (in some cases) by half a percent.

Am not in retail, but handle the VAT for my brother's company which uses the fixed rate scheme, and basically his company's (net of VAT) earnings are now 0.45% lower (his VAT bill dropped by 1.5% of GROSS earnings).

"Fixed Rate Scheme" is only for companies with small turnovers. Believe it is intended to reduce paperwork and simplify returns for one-man (or small family) operations.

LizzieS_2

Is the fixed rate scheme above 15%. If it isn't those retailers do not actually lose out.

For example if your brother pays VAT on purchases at 13% and collects VAT on sales at 17.5%, he pays over to HMRC the difference between the VAT collected (17.5%) less the VAT he himslef had to pay (13%).

A reduction of 0.5% means he would now pay HMRC the difference between VAT collected from sales of 15% less VAT paid out himself 12.5%, ie overall he will be in the same position.

clunkfaeoffshore

The idea of the fixed rate scheme is that you don't have to claim the VAT back for every little item. in fact it's only single capital items over about £2,000 he gets to claim VAT back on.

He pays a percentage of gross (including VAT) decided by HM C&E depending on the type of business.

In my brother's case it's an IT consultancy, so he used to pay 13% (of 117.5%). From Monday he will pay 11.5% (of 115%). His GROSS receipts will drop, but what HMC&E expect him to pay them has dropped less.
Means he's actually worse off.

For every £100 + VAT he earns, he loses 45 pence compared to what he netted on the old rate.

Still makes more sense than keeping receipts for every paperclip and claiming back the VAT. (and paying for the accountant to sort through it all)

Believe that's why the scheme was brought in for "very small" businesses.

Some small retailers have had their rate drop even less, so are even worse off with the new "cut".

Don't be surprised if your local corner shopkeeper looks at you funny if you ask why he hasn't "passed on" the full 2.5% VAT cut.

lesley1960

Any company who bills you nett plus vat you will see the lower vat rate .
Any company who sells goods including vat , you may or may not see a decrease , and those items you dont see decrease may be for a very good reason , tbh the amount of posts / comments i have seen where people expect a decrease of 2.5% on everything they buy makes me despair at some peoples basic grasp of economics

Pennywise

LizzieS wrote: »

A reduction of 0.5% means he would now pay HMRC the difference between VAT collected from sales of 15% less VAT paid out himself 12.5%, ie overall he will be in the same position.

No, this is Christmas, shops have already bought their stock and paid 17.5% which they can't reclaim if on the FRS. Your argument stands for the future when he buys new stock to sell, but most of the December sales will be stock bought at 17.5% before 1/12/08, so he will lose money if he reduces his prices. Also remember that many local businesses aren't seeing a decrease in their Flat rate at all - i.e. pubs, post offices, convenience stores etc have seen NO reduction in their flat rate, so any reduction in selling price will come straight off their profit, or increase their loss. As already said, don't expect the smallest of local businesses to reduce their prices and don't give them a hard time if they don't. So much for Govt "helping" small business!

Lifeisbutadream

According to the HMRC website the flat rate will be changed accordingly, so anyone on the flat rate scheme will be in teh same position as they were before (i.e. able to reduce by the same amount if they wish)

blue_monkey_2

Agreed. What they also do not realise is that although fuel duties and car tax has risen we still get paid the same pence per mile claim back for car use that we did 5 years ago!!

From a retailers side, the extra profit 'in their pocket' could be the difference in losing jobs or their business. Look at Woolworths and MFI - who saw that coming. Would they be baddies if they did not reduce thir VAT because they wanted people to hold onto their jobs if they could. It was interesting to see that held out until after this mini [strike]tax con[/strike] budget to see if the government would give them any help whatsoever. Clearly they didn't.

At this moment in time we should just accept things as they are. I do not see any goodies or baddies here, a £25 on VATable items shop in Tesco will save me 50p if they reduced their prices, I am not moaning about that as there are bigger things going on.

I'll still do the same as I do now, I can go to the shops above and find that prices are 15% less on Amazon so I buy from them, a 20p cut on a toaster is not going to get me buying another as I do not need one. Even if I needed a new cooker it'd save me just £10 or so - I can get more than that by shopping around anyway.

I am astounded that there is a 'name and shame' thread in all honesty. You should be supporting businesses and their descisions, it has little to do with greed as there is hardly anything to be greedy about, but if it helps keep a companies head above water and people out of unemplyment then we should be supporting those companies.

We talk about companies greed but what about consumer greed? When there has been a price or voucher glitch on something posted on grabbit and people have not been sure whether their orders have gone through so have called the company concerned, they have subject to all sorts of abuse because they have bought the glitch to the retailers attention. I would feel ashamed if my greed to buy things that I probably do not need but that I am buying as an 'extra luxury' to my household meant a company went under and people lost their jobs.

Of course, any extra discount is a bonus but we should be hoping that we can ALL get through these difficult times - employer, employee, consumer - as none can survive without the other - with our jobs intact rather than 'naming and shaming' retailers who do not reduce the price of a toaster by 20p.

Out of interest - the people who are naming and shaming (DFS poster excluded, LOL) did you actually have any intention of buying from these retailers or are you 'naming and shaming' to stop people from buying from these retailers and helping other people into the dole queue when they have to close. Serious question.

No amount of naming and shaming will not stop me doing what I do now, shopping around to get the best price!! Some retailers who do not drop prices at all might still be cheaper than those that do so this thread is completely pointless IMO!! I think people need to get a grip on themselves and work out just what they will actiually be saving instead of getting excited and thinking they suddenly have enough for a Carribean break next summer on the savings they are going to make out of this!!

Timmne

I wish I could have pressed "thanks" a few more times blue_monkey; what a ridiculous, unfair and rather uneducated thread - OP, I too question your motive for this thread.

blue_monkey_2

I am a small business owner - it is very quiet for this time of year when we should be inundated with orders. Yesterday I was called selfish because I said I would not be knocking the 2.5% drop off. This would be off a bra I have for sale at £7.50 - reduced from the RRP of £26!! And I've a 10% discount code people can buy it with. And I was called selfish for not wanting to knock another 17p off! My prices are already discounted I have nothing to be ashamed of by not adding the 'tax drop' as even if my competitors srop their prices I'll still be cheaper so maybe you want to add my business name to the list and shame me as well!! Selfish. PAH!

I am just getting more and more angry with selfish consumers thinking it is OK to slag compaies off and run them into the ground - they clearly have no idea of the economic times we are in and the times we are facing and how many people will be losing their jobs after Xmas if things do not pick up. And then go to name and shame them.

Anyway, I could rant on but it just makes me so damn cross and it has really opened my eyes just to how low people will stoop for greed - that is saving a few pounds osmething they probably did not want to buy anyway. Someone said on another thread that they were looking forward to going to the Woolies closing down sale. I am sure that the 30,000 people about to lose their jobs will be pleased to hear how people are benfiting from their times of misery just before Xmas.

Argh. I am getting so mad by the blinkered view so many people have right now. All I do on these threads is try to explain the impact this will be having on some businesses - the VAT drop was supposed to get us through these hard times and if this means people need to 'pocket more money' to keep their employees in jobs then I am happy to accept that. Also that there are some non-registered VAT companies who have already bought their stock with the 17.5% added on that cannot afford to lose that.