Forum Moderators: buckworks
Will it make a difference? When will it actually come into effect? Will there be a drop in sales between now and whenever it is actually implemented?
Most importantly, do you know every place that you have *1.175 hard coded? ;)
The obvious problems include tourism and cross-border trade.
I've found some 1.175s in the weirdest places - odd bits of php code to do with things like Froogle uploads and the like. Our backend database (and I didn't write this bit myself) has the 1.175 nicely in a constant, but changing it will change the value of VAT for every order stored on the system. :)
Think I've got them all now..
Calculating the tax on the basis that the rate on the day is the same as the rate as at the tax point is a common mistake.
VAT drops to 2.5% to 15%. Do you think retailers are going to drop prices 2.5% or keep the prices the same and skim the extra profit?
OK, a bag of spuds may fall from £1.78 to £1.74 but will a £395 TV fall to £386.55?
Put it another way. Your site sells widgets for £9.99. Will you now sell it to your customers for £9.78?
Exactly!
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I agree with the OP. It will be a nightmare search and replacing 1.175.
It's just activity for the sake of appearing to do something...reminds me of a story I once heard about a guy who sharpened saws for a living and thought he found a great skive, instead of sharpening 10 saws a day, he would sharpen the same saw 10 times...just so his bosses could see he was doing something.
Wonder what Alistair Darling did before he was a minister?!?
I agree with the OP. It will be a nightmare search and replacing 1.175.
It's not a major issue for us. The VAT rate is stored globally and is generally taken from there, but there are these odd places here and there where it has been hard coded by someone (often me) in a hurry.
And I did find it amusing that our offline database stores VAT as a global, but changing it there changes all previous orders... Someone tried to do the right thing, but just didn't quite get there :)
It's been confirmed now. VAT to drop to 15% next Monday (1st Dec).
Agree with those who say this isn't going to make much of a difference, although we will be passing it on in full. The appreciating dollar and depreciating sterling has forced us to raise prices 20% or so across the board in the last few months, so any scope to cut them a bit is welcome.
Agree 100%. Or * 1.00
Then hard-write the values on invoices (rather than a cost * VAT-rate calculation on recall).
@ everyone else
Nope, it is a stupid idea. Better moves include changing it to:
5.75% (an apparent price drop of 10%)
11.625% (an apparent drop of 5% but messy as 3 decimal places or 5 Sig. Figures)
Can you imagine Argos printing a new catalogue? All the B&Ms printing new POS for Xmas? It will just be absorbed.
And given it will do nothing at the front lines, all it will ACTUALLY do is generate lower tax receipts, AKA future tax rises (or lower public spending).
although we will be passing it on in full
Yep, thats the great thing about ecommerce. At the end of the day, VAT is just a calculation.
That is the nightmare scenario for us webmasters. The nightmare scenario for the cafe owner, the fruit and veg guy is that they have to spend hundreds painting new price boards!
Put it another way. Your site sells widgets for £9.99. Will you now sell it to your customers for £9.78?
Exactly what I was thinking! I've spent ages setting up all my products at nice .99 prices, they'll be a right mess if I change...
Maybe some of my higher price items I will drop, but most of my products are £10 or less, so the savings for my customers will be pennies.
I don't get the VAT drop? The only people that this will benefit are people buying high price items, such as buying a new car. And if you can afford to buy a new car, then I don't think you really need financial help?!
Jonathan
That's a nice saving but how many people do you know are going to start a £10,000+ extension within the next year?
And how many people do you know who drink, smoke, or buy fuel? Everyone, right?
Well they are not going to see the 2.5% reduction because the chancellor is increasing the tax take on those items to compensate for the 2.5% drop in VAT. What a rip off!
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One bit of good news for webmasters is that webhosters *should* drop their prices.
Next week the price of a rack server, comms, and electricity costs should come down 2.5% and this cost should be passed on to customers renting servers / space.
Now will the hosters do that or see this as a way of increasing their turnover by 2.5%?
It depends on the billing script I guess. One of my colo servers is £43 + VAT with the VAT applied at the checkout. Next month I *should* see a saving of £1.08. Woohoo.
One bit of good news for webmasters is that webhosters *should* drop their prices.
But this is only relevant to those who aren't VAT registered. Those of us who are may see prices rise if suppliers/providers keep their inc VAT prices fixed...
This is one reason why we are not going to raise our prices - nearly half of our business goes to VAT registered companies, so it would be an out and out price rise for them.
