VAT Cut Implications for Ecommerce Sites in the UK

It’s also unlikely the saving will be passed on by a lot of companies who will avoid dealing with the headache and may just ‘pocket’ the difference theoretically raising the value net of VAT for their books.

Who’s for some lateral thinking? Yes we are in a global recession, and “fraudulent” banking practices were largely responsible for pushing us into it. But why were we so vunerable? I believe that western economies were totally unstable, pressurised by the current fuel prices. Bush and Blair lied and cheated our countries into a war in Iraq, the heart of world oil production, this was the golden opportunity for speculators and producers to hike the price of crude. You reap what you sow!
We are going to suffer, but it will be no comparison with what those two have put the people of Iraq through, and for what?

Well looking on the bright side it should be a field day for HTML programmers fixing all those ads.

the implications for the thousands of VAT registered e-commerce sites in the UK could be big.

With all the serious unsolicited discounting going on, do you really think anyone will notice a further 2.5% discount? Do you honestly believe many of the companies will pass it on? It’s just another huge debt that we will have to pick up in a couple of years time. There is a real need for fiscal measures, but the real victims, the pensioners and the soon to be unemployed will not benefit at all, they are unlikely to be buying much at all that attracks VAT. This measure wasn’t thought through, it’s a damned expensive damp squib. This problem demands some entrepreneurial flare. Spell it out, if you spent £100 a week on vatable goods, you’ll probably be about £1-£2 a week better off [allowing for the companies who won't pass it on], how much of an impact is that going to have on your local economy? As usual, the rich, who can take advantage of this situation will benefit on large purchases, though again it will pale against the discounts already available.

It would be nice if they made it permanent, with a guarantee that it wouldn’t be increased for X years. That would generate more e-commerce out of the UK because right now our VAT rate is uncompetitive compared to other EU nations.

But, with it being only temporary, it will just cause problems. And 2.5% isn’t that much.

I was buying a bunch of kit for myself last night, and I thought about waiting until next week so I could shave off 2.5%, but it just wasn’t worth the wait…

I’m not a money expert – far from it. I just wish the government would think before saying “hey, let’s trick ‘em by reducing VAT but increasing prices on petrol and alcohol and cigarettes”. It doesn’t make any sense as the actual savings might not really entice people to buy more (wow! I saved £10 on my new sofa!), and represents an overhaul to e-commerce systems in the UK in less than a week. Maybe I’m overly skeptical, but this seems like such an idiotic idea to “fix” the economy.

I am currently in the process of completing a huge Linens e-commerce site which has over 1500 products and variations.

Cheers Mr Chancellor

As mentioned above, £2.50 saved for every £100 spent, or even £25 saved for every £1000 spent just doesn’t cut the mustard for me (and quite possibly a huge amount of the population). Admittedly I’m no economist so maybe I’m missing a trick or two, so I’m happy to be enlightened.

It’s all just a great big smokescreen.
Any potential benefit to the consumer will be far outweighed by the costs of implementing this 2.5% shaving off the rate of VAT.
The knock effect of having to adjust all my regular incoming and outgoing invoices for 13 months before reverting to 17.5% is both unwelcome and ineffective.
This will in practical terms cost me (a small business) far more in admin than any possble saving – utter waste of time.
Poorly thought through peice.
I for one will be increasing my net pricing so that total ‘retail’ values are not affected.
Is that what yu wanted mr Chancellor?

I changed the VAT rate on my website in about 2 minutes (and it didn’t cost me anything to do) . If your site is designed so badly it can’t change easily to things like this I suggest you get a better web designer. I designed my site myself so I guess other people aren’t as fortunate.

I agree the small change will probably make little difference to the econony. But Ecommerce is one industry that really should be flexible in situations like this. I can understand Bricks and Mortar businesses having trouble.

I can’t be bothered sorting out someone elses messy designs, but if you want a site that can move with the times without charging you extortionate rates, come see me!
(not spell checked)

Tom

It really shouldn’t be a big deal for e-commerce sites to update their item prices. Hard-coding a tax rate is a silly idea in the first place…let’s hope not many of them adopted this approach! Banner images on the other hand will be time consuming.

If the VAT is going to fluctuate further in the future then businesses would be better off just advertising their product banners to say “£xx.xx + VAT”, like they do in the U.S. However, the U.S. does have a different tax rate in each State, making it more worthwhile.

The rise in the percentage of VAT in e commerce business is continuously disturbing the scope of business to a certain extent. The rise is VAT percent will result in certain changes, which will effect directly or indirectly to everyone.