VAT rise is not the end, says expert

Date: 25th August 2010

Small businesses operating in the UK's retail sector could be set to notice a range of changes to VAT in the coming years, it has been claimed.

Tim Denison of Synovate said that next year's increase, which will see the rate rise from 17.5 per cent to 20 per cent on January 4th, could just be the start.

The expert claimed the government may look to implement further changes similar to those adopted by other European nations.

"VAT is likely to be considered again in the budgets of 2011 and 2012 … with an extension to other categories of products a possibility, or the re-introduction of another band on luxury goods, last seen in the 1970s," he commented.

"The January 2011 rise is unlikely to be the end of the story."

However, a recent Synovate/KPMG report, published in conjunction with the Retail Think Tank, has claimed next year's rise is unlikely to affect the health of the UK's retail sector.

According to the study, promotions either side of Christmas and the length of time businesses have been given to prepare could even see some firms enjoy a boost to their sales.

Posted by Thomas Fletcher