VAT reductions - being passed on by retailers?

TwoCan_2

Hi

First time on here, so thank you for your patience in advance...

I was in a Next store in Milton Keynes today and noticed that they were displaying notices stating that as from 26th December 2008, the VAT element of prices would no longer be adjusted at the till (from 17.5% to 15%).

The notices (effectively) state that as from the above date, all prices for merchandise (sale and non-sale items) had been adjusted and that prices on items were therefore correct.

Perhaps I am being overly sceptical, but how can customers be sure that prices have really been reduced and that retailers (not just Next!) have not simply used the reduction in VAT to maintain prices at previous levels and hence make 2.5% more profit??

Please note that this post is in no way intended to be politically motivated, nor do I have any particular issue with Next... I guess my question can (in theory) relate to many retailers...

feisty1

do u really think next (or any other retailer) are going to "rob" u/me for 2.5%!!!!!!!!!! at the risk of prosection from HM Revenue & Customs!!!

tentickles666

TwoCan wrote: »

Hi

First time on here, so thank you for your patience in advance...

I was in a Next store in Milton Keynes today and noticed that they were displaying notices stating that as from 26th December 2008, the VAT element of prices would no longer be adjusted at the till (from 17.5% to 15%).

The notices (effectively) state that as from the above date, all prices for merchandise (sale and non-sale items) had been adjusted and that prices on items were therefore correct.

Perhaps I am being overly sceptical, but how can customers be sure that prices have really been reduced and that retailers (not just Next!) have not simply used the reduction in VAT to maintain prices at previous levels and hence make 2.5% more profit??

Please note that this post is in no way intended to be politically motivated, nor do I have any particular issue with Next... I guess my question can (in theory) relate to many retailers...

#

i suppose if they had already reduced everything it would have a strange amount of pence on the end. like £** and 71p

as far as im aware they dont HAVE to pass on the 2.5% anyway

feisty1

Under the Department for Business Enterprise & Regulatory Reform's code of practice, companies had two weeks from 1/12/2008 to implement the changes. The temporary reduction ends on December 31st 2009 although it is not yet decided whether the rate will increase further than the standard 17.5%.

wymondham

Unless your spending many thousands, then you'll probably not even notice if the correct VAt is charged or not ..... must count as the most pointless excercise of the Brown era?

fc123

We adjusted for prices at point of sale for 3 weeks........then stopped. Seemed pointless in terms of encouraging more spend, however, we have also absorbed increases in costs elsewhere in the business but didn't push up the price by a few pence each time. However, I am able to reduce our mark up on certain items due to the reduction. Helps us compete with the big boys.

AFAIA, the VAT reduction was also to help cashflow and the like.

The Govt. were also worried about the effect of the dollar on imports (as 99.9% of non food goods in the shops are imported) so, by dropping the tax take, the intention was not for retailers to hike up prices as much.

When the VAT goes up, many big chains probably WON'T pass it on (so you think they are being oh so nice...and they will have ad campaigns to tell you how nice they are too) but it will filter through after a while.

VAT is a pain in the buttt.......but what can you do eh??

sarahb

As far as I could see this was always going to happen when all the major retailers got their new stock in, for mid-priced items anyway - were we really expecting to see stuff priced at eg £9.78 instead of £9.99 for anything other than a very short period ?

ad9898_3

Can't say I've noticed, however what I will notice is the £12 billion we have to pay back.

RobertoMoir

TwoCan wrote: »

Perhaps I am being overly sceptical, but how can customers be sure that prices have really been reduced and that retailers (not just Next!) have not simply used the reduction in VAT to maintain prices at previous levels and hence make 2.5% more profit??

You can't. They can set prices how they want and aim for the extra profit if they want, just as we can choose to shop elsewhere.

RobertoMoir

feisty1 wrote: »

do u really think next (or any other retailer) are going to "rob" u/me for 2.5%!!!!!!!!!! at the risk of prosection from HM Revenue & Customs!!!

What would they be prosecuted for? Last time I checked, attempting to make a profit wasn't illegal.

They're not obliged to pass on the VAT reduction to us. They can't claim to be charging 17.5% vat of course, but they can raise their prices to account for the VAT reduction and pocket the difference.

Pobby

I really did have to laugh.Old Gordo, the man who saved the world. Banks being bailed out, high street names going into liquidation, housing in free fall, stock markets falling. And he comes along with this. 15% vat rate !!!!!!! Honestly, how much was that going to do to get us all spending!!!!!!!