Cuts in VAT to 'cost thousands'

Date: 2nd December 2008

Business start-ups are potentially facing huge costs to become compliant with the new rate of VAT.

That's according to finance systems supplier CODA, which believes that the costs associated with changing price tags and communicating price changes could far outweigh the increase in consumer spending.

Following Chancellor Alistair Darling's decision to reduce VAT by 2.5 per cent to 15 per cent last week, retailers have been scrambling to update their prices, the group says.

David Turner, group marketing director at CODA, said: "The impact of the VAT cut on retailers has largely been overlooked as the government looks for ways to increase spending.

"Many retailers are struggling in the current environment and it is clear that they do not believe a cut in VAT is the answer."

He concluded that although firms were keen to pass on benefits to consumers, they did not want to do so at their own expense.

Another pressing matter for business start-ups is the online self-assessment tax return deadline, which falls on January 31st 2009.