Is the VAT reduction being passed on?

[DorsetStrider]

Halfords are only passing on the VAT cut on "service items" not on anything else. Despite the fact that it says on the door that the VAT will be taken off at the till.

 

Oh and the "Service Items" have all gone up in price. (Nothing illegal I know.... but immoral/unethical?)

[www.dot.com]

as an accountant i can say that it most cases i bet its not being passed on. It is also worthwhile checking your invoices from manual workers ie plumbers etc as many keep forgetting to amend the rate!!

[Its WAR]

So what happens when the vat rate returns to 17.5% ? I am a retailer and have bought say £100,000 of stock for which I have paid an additional 15% in vat to my suppliers. I can claim this 15% back of course, what I cant do is claim back 17.5%. But, if the item does not sell until Jan 2010 , I will have to give 17.5% of the retail price to the government.

 

So from Jan 2010, I will give 17.5% of my turnover to the tax man, when I have only been able to claim 15% of vat charged to me on my cost price.

 

Or: A new business opens in November 2009. It is not vat registered. It buys £100,00 for opening stock and pays £117,500 for it. It cannot reclaim the vat. Then after a few months, its turnover hits the vat limit of £67,000. From then on, it has to pay 15% of its sales to the vat man. It can of course, now reclaim the vat on his purchases of stock (including the stock he bought before his registration if he still has some left). Can he claim the vat paid at 17.5% or only the new rate 15% ?

[buzby]

The VAT you paid to your suppliers is reclaimed, so ceased to be an issue. When you sell it on, you then charge the level of VAT appropriate at the time of sale, based on the price you sell it at - which could be higher or lower that you had originally planned. Market forces change faster than VAT rates, the the amount paid in VAT is always dynamic.

 

You cost price is always Vat-free, so the rest of your argument is self-defeating.

 

As to your last point - if he paid VAT at the higher rate and has the documentation to prove it, then he reclaims that amount. There is no 'loss' to the retailer.

[iloveshopping]

@bookworm

 

actually, tax reduction has shown to be very effective and generates high income for the government without anyone really feeling the difference.. I haven't seen it all around though.. lack of participation or does the reduction first generate costs for the sellers?

[Schist]

As someone who runs a retail business I can only speak for myself when I say we did pass it on...

 

Bottom line, I would be amazed if it produced a single additional sale and simply cost us additional money to implement! In short it was for us a costly waste of time and effort.