VAT cut claims disputed

Figures suggesting that not all retailers passed on last December’s cut in VAT have been countered by a leading trade organisation.

According to the Office for National Statistics (ONS), as many as a third of retailers did not reduce prices last December in line with the reduction in VAT from 17.5 per cent to 15 per cent.

The move shaved 0.5 per cent off the consumer prices index rate of inflation for that month.

However, analysis of the data indicates that 34 per cent of businesses did not pass the cut on in December. Some 43 per cent of shops introduced a price change at the till, while 14 per cent marked prices down on the shelves and 9 per cent used a combination of both methods.

The analysis, though, has been disputed by the British Retail Consortium (BRC).

A spokesman commented: “Our members made a huge effort to ensure the cut happened, and we are not aware of any member who didn’t pass the cut on to their customers, even at the start.”

The BRC went on to say that the change cost businesses some £90 million to implement and has estimated that a similar amount will be involved in reverting to the old standard rate of 17.5 per cent VAT, which is due to come into effect on 1 January next year.

Retailers want the government to delay the reversion until after the busy Christmas trading period is out of the way.