Retailers tackle VAT increase

Garden retailers have absorbed VAT rises, with suppliers also swallowing some of the 2.5 per cent hike that came in on 4 January.

HTA retail committee chair and Haskins buying director Philip Evason said the rise had also been added onto some of the retail prices. "Suppliers have absorbed some of the rise where there are absolutely key price points and we have absorbed some and put on prices with others," he added. "It will make an impact and is just part of the doom and gloom of January."

Evason warned that customers were reluctant to spend and tax rises including a fuel duty hike were not helping the mood this winter. But he said retailers had had ample time to prepare for the change.

Labour Party leader Ed Miliband warned recently that the increase would lead to 250,000 job losses and would cost the average household an extra £7 a week.

HM Revenue & Customs director Jim Harra said retailers must charge the new 20 per cent VAT rate on all standard-rated takings received on or after 4 January. If a business receives a purchase invoice dated on or after 4 January that shows the VAT at 17.5 per cent, only the actual amount shown can be reclaimed.

Consumers should be aware that although the 20 per cent VAT rate should be charged on all standard-rated sales from 4 January onwards, there will be occasions when they might be charged at the current 17.5 per cent rate. If in any doubt, they should contact the vendor for an explanation.

- For further details on the VAT rate change, see www.businesslink.gov.uk/vatratechange.


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