The VAT rise was inevitable and, in fact, I was surprised it wasn’t put in place straight away.
The short grace period provided by the government has given businesses valuable time to assess how they are going to present it to their customers: some will simply add the rate rise to their charges and hope to ride through the wave of customer grumbles and complaints about tax rises; others will try and incorporate the additional 2.5 per cent into their own costs to prevent too much disruption into their customer relationships.
I have always been transparent about our prices – they are there for everyone to see on our website. Any attempt to hide the rise or mislead customers goes against every ounce of my business sense.
I have read about some so-called professional-advice firms telling companies to put new price strategies in now, while consumers are occupied with other matters and less likely to notice the changes.
Apparently the reasoning is that, in January, these businesses will be able to demonstrate “price consistency”! Unbelievable. Do these advisers have any idea about the real world Find me one business owner who does not pore over every invoice they receive and I’ll show you a man going straight to the poor house.
Firms also have to consider the organisations they deal with such as charities, housing associations and healthcare providers, who cannot claim back VAT. These organisations do not want to get back to their desks after the New Year to find a pile of revised invoices containing a hike in their bills that they have no way of reclaiming!
For firms selling to the public, the next few months should focus on pre-VAT rise “deals” that will encourage consumers to spend before the New Year.
At Pimlico Plumbers we are reaching the time of year when our customers start firing up their central heating and call us in for their systems’ annual service. Historically, services take place throughout the winter. However, we are already seeing a trend of increased service bookings before Christmas as customers look to pay VAT at the current rate.
The VAT rise will inevitably be a rough ride for many businesses, but it’s a necessary evil considering the huge debt the government has been left to deal with. Let’s just hope we can make it as painless as possible.
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