As You Were! The VAT standard rate reverts to 17.5% on 1 January 2010.

November 9th, 2009  |  Published in Uncategorized

The VAT standard rate reverts to 17.5% on 1 January 2010.

Whether retail businesses increase their prices or not on 1 January 2010, they will have to account for VAT at the 17.5% rate from then on. So if the prices are not adjusted to reflect the rate change, the business will suffer an immediate reduction in margin.

So all retailers who supply standard rated goods need to think in advance about the impact of the change. Whether they re-price or not, the rate will go up, so they will need to consider a mix of three alternatives :

Hold prices and take the profit hit

Increase prices to maintain margins, or

A mix of the two – increasing prices by less that the VAT hike to avoid hitting sales too hard, and accept some margin reduction.

Our client base is small businesses, self-employed sole traders and partnerships in the Tameside towns of Stalybridge, Dukinfield, Ashton under Lyne, Droylsden, Audenshaw, Hyde, Denton, Mossley and Longdendale, and its surrounding districts of Stockport, Oldham, Glossop and Manchester.

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