Businesses prepare for the January rise in VAT
The New Year will also usher in a new tax increase as VAT goes up from 17.5 per cent to 20 per cent on January 4. Anna Blackaby finds local retailers and businesses split over how the rise would affect trading.
Nigel Barker, landlord of The Wellington pub, Bennetts Hill, Birmingham: “It sounds a bit cocky but I don’t think it will have much of an effect on us because we are such a specialist pub and people come here specially.
“When we had all the duty increases under the last Government, it didn’t have any detrimental effect on the business.
“I think a lot of pubs will suffer, though. It sounds a bit snobby, but the more downmarket pubs that attract customers that are out of work or on low incomes will suffer more.
“We tend to attract a more affluent clientele and, with another 10p on a pint, they might grumble but it’s not going to stop them enjoying a traditional pint of beer.”
Paul Spencer, partner at Coventry accountancy firm Spencer Gardner Dickins: “The biggest challenge we will face is making sure our systems are able to recognise the new VAT rate in time for the change on January 4.
“Lessons will have been learnt from dealing with the changes in VAT rates in the past few years – however it will still take up a considerable amount of time to get the systems in place.
“The changes involve a complete overhaul of our existing software and our IT department will have to dedicate a significant amount of time into making sure these changes are implemented effectively and efficiently.
“We have also been working hard to get invoices to our clients as soon as possible in order to save them money when possible.
“The biggest challenge for us is implementing these changes during what is already a very busy period for us. However, once we have overcome these initial hurdles, it will be back to business as usual.”
Mark Howard, owner of Disorder Boutique clothing store, Needless Alley, Birmingham: “It’s going to unfairly affect small businesses, particularly a business like ours because at the moment we design and manufacture all our stuff in Birmingham.
“I’m actually in the process of writing to the Prime Minister about it.
“We have made a point of manufacturing in this country and we wanted to put something back into the economy.
“By putting an extra 2.5 per cent tax on us, we have to pay that before we make any profit.
“It makes very little sense for us to continue doing what we are doing in this country.
“We have already got high costs. It’s going to make it even more difficult for us, so I’m quite nervous. It might force us out of the high street.
“What people don’t realise is that the rents and rates are astronomical.
“But we have to be resourceful. We have survived this long because we are, so we will just have to be resourceful about things.”
