Retailers urge Darling to delay VAT increase

UK retailers have urged the Chancellor to delay the increase in the VAT rate
scheduled for December 31 in order to minimise disruption to stores’ Christmas

Increasing the VAT rate to 17.5% on 31 December from the current 15% rate,
would cost the sector around £90m to implement, the British Retail Consortium
has estimated.

The BRC has urged Chancellor Alistair Darling to delay the planned
reinstatement until at least February 2010.

Stephen Robertson, BRC director general, said: ‘Retailing is facing the
toughest trading conditions in decades, with predictions of 15% 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.’

The retailing sector spent around £90m last December to implement a cut in
the VAT rate to 15% from 17.5%, according to the BRC.

Robertson added: ‘Changing VAT rates back to 17.5% 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% above normal – so
it’s a time when staff should be focusing on serving customers.’

The call to delay the VAT increase by at least a month is part of the BRC’s
Budget submission published today.

The submission includes requests to relax tax and business rates. Keeping
increases in the minimum wage below 1.5% and cancelling the proposed 0.5%
increase in employee and employer NI contributions, the BRC said.

Proposed property tax changes, such as the revaluation of business rates,
could see retailers’ property costs increase to £7bn by 2010/11, the BRC said.

Further reading:

increase planed for worst possible times – says BRC

Related reading

aidan-brennan kpmg