There is increasing speculation that the Chancellor will shortly announce changes to some of the UK VAT rates. Organisations need to consider the impact of this on sales, purchases, systems and pricing.
The potential changes that are being most frequently reported are:
Any general reduction in the standard rate is likely to be for a very limited period, in order to encourage consumers into discretionary spending in the knowledge that prices will soon rise. Germany is cutting its VAT rates for just six months. When the UK reduced the standard rate of VAT from 17.5% to 15% in December 2008, this lasted for 13 months. It then rose to 20% twelve months later.
What should organisations consider if there is a temporary reduction in VAT rates?
To discuss how changes in VAT rates could impact your organisation, please speak to Robert Warne, Robert Marchant or your usual VAT team contact.
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