With so many businesses across the UK imploring the Government to delay its highly unpopular VAT increase on December 31st; it is no surprise that The British Retail Consortium (BRC) has finally made a robust stance in calling for a delay to this tax increase.
The BRC has reinforced the nationwide plea by UK retailers not to raise the current 15 per cent to 17.5 per cent VAT at the end of the year as this is widely known to be the busiest and lucrative time for the high street, and could potentially cripple, if not crush, thousands of businesses within the sector.
A report released by the BRC in May announced that the VAT cut to 15 per cent in 2008 cost the industry a staggering £90m to action, and should the increase go ahead in December, is likely to cost retailers the same again. Astonishingly, the BRC are only requesting that the deadline be put back one month, but more significantly they want an instant freeze on all new business rate burdens and the reinstatement of empty property rate relief.
The freeze would make a huge impact on what retailers currently outlay each year on commercial rates and costs, as the high street pays around a quarter of all business rates, even though they contribute only 8 per cent of the GDP. This could potentially soar by 30 per cent, to £7 billion by 2010/11 due to revaluation of business rates (£900m), the introduction of business rate supplements (£160m), the abolition of empty property relief rate (£115m), and increase of business rates (£250m) outgoings which are currently suffocating the sector and have already prescribed the downfall of Zavvi and Woolworths in the past 12 months.
“Changing VAT rates back to 17.5 per cent at the end of December will soak up a lot of effort at the busiest and most important time of the year for most retailers,” say Stephen Robertson, BRC Director General. “For some shops post Christmas sales were 50 per cent above normal – so it s a time when staff should be focusing on serving customers. Re pricing is very labour intensive and the need for overtime and bank holiday employees will make it a costly distraction for retailers. The Government should postpone the reintroduction of the 17.5 per cent VAT rate by at least a month.
UK retailers have always been resistant to handouts, even with a bleak economic climate, but should the Government impose the increased rates and costs, then the country will experience further job losses. It is more about preservation than subsidisation, as the retail sector has been the backbone of our economy for decades; providing one in nine UK jobs. The Government needs to quickly recognise this and sustain the foundations and heritage that are now under serious threat of collapse.
Hazlemere Windows are one of thousands of businesses in the UK who would severely feel the pinch of the increase. Paying the 17.5 per VAT wouldn’t just equate to a surge in their business rates, but could essentially lose them business. They provide windows, doors and conservatories to both the domestic and commercial customers, and are conscious the increase in VAT to 17.5 from 1st January 2010 could deter people from using them.
“Whilst most businesses can claim most of VAT back, sadly the vast majority of Hazlemere Windows, Doors & Conservatories retail customers can not,” says Mark Austin, Marketing Director at Hazlemere. “Therefore any tax increase is clearly not an incentive to purchase retail goods to help stimulate the British economy. Hazlemere Window Company supports the BRC’s initiative to delay the implementation of the VAT tax increase by a month, and would much prefer no increase until the retail economy was in a healthier position.”
Author Resource:-
Matt Crick is writing on behalf of Hazlemere, one of the UK’s leading home improvement specialists and provide solutions for those searching for quality UPVC and aluminium replacement windows and doors. With over 25 years experience in home improvement, Hazlemere have the knowledge and expertise in design, manufacturing and installation of replacement windows, doors and conservatories, and a host of bespoke home improvements. For more information visit http://www.hazlemere.co.uk
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