VAT Cut Implications for Ecommerce Sites in the UK

  • 1
  • November 24, 2008
Patrick Altoft

Patrick Altoft

Director of Strategy

In todays pre-budget report the Chancellor introduced a reduction in VAT rate from 17.5% to 15% to help kick start the economy and increase consumer spending.

VAT has been set at 17.5% since before ecommerce was invented and this latest change is going to cause a huge headache for ecommerce websites.

VAT Cut Implications for Ecommerce Sites in the UKSome systems are likely to have VAT hard coded into the ecommerce systems but even advanced programs will still need to be adjusted to reflect the new rates.

A number of retailers without a retained website development company will be unlucky enough to have the VAT rate hard-coded into their CMS. This makes price changes before next Monday almost impossible.

Another major issue will be updating banner adverts – a number of which have prices included in them. Most small businesses don’t update banners on a regular basis and many will have been using the same ones for years. Unless the company has retained the original designers and source images making changes to these will be almost impossible meaning prices will be uncompetitive from next Monday.

Fixing banners in a multitude of sizes and re-uploading them to ad-servers across the web isn’t a quick task.

As I write this more and more implications spring to mind. Google Adwords campaigns often have prices in them, Google Product Search feeds will all be wrong straight away.

What do you think the conversion rates will be for shopping carts displaying 17.5% VAT next week? Visitors will just go straight to competitors websites.

For help with VAT, ecommerce and banner adjustments contact Branded3 today.

Thanks to Online Backup Technology for the tip.