With Alistair Darling’s pre-budget report (PBR) due out at some point today one of the most expected changes is the reduction in VAT from 17.5% to 15%. Whilst this is one of a range of matters put forward by the government to stimulate the countries economic growth, in practise how will this effect systems which companies have had in place and working practises.
Whilst most larger accountancy packages will have VAT set as a changeable variable there will undoubtedly be a large amount of systems to which the VAT value is hard coded. What happens to the business who has a bespoke system which looks after their order management and they don’t know how to change the VAT amount? Obviously they will need to update this as soon as possible to continue placing orders and sending bills. The cost of this is an unknown factor and whilst the government would see this as the ‘cost of doing business’ in the current climate additional costs are what the all businesses are trying to keep to a minimum.
The second area where we can see a burden of cost placed onto businesses is anywhere where new literature or websites have updated with the old VAT value on it ready for either Christmas sales or the New Year Sales. Again this change is a costly and time consuming change.
Do the government take this into consideration when changing something as fundamental as the VAT value, and have they consulted businesses to find out the true cost of changing this. At the moment we don’t know when the change will become applicable but to know that we’ll have to wait for the speech from Alistair Darlings speech.