Smaller retailers have warned that the cut in VAT could “backfire” on the government because administration charges will be too high.
Director of finance at the Forum of Private Business Nick Palin said time is crucial for retailers at this period of the year and they therefore should not have to “occupy themselves” with administration.
He commented: “A product that sells for £4.99 this week will retail for £4.89 next week after the VAT rate has been reduced
“This shows how ill thought-out this reduction has been. All it does is increase the amount of time smaller retailers have to spend wading through bureaucracy.”
Retailer Christopher Tuffley added: “What makes this VAT cut worse is that it comes at the most crucial time of the year.
“I do 35% of my trade in November and December and so the introduction of what I consider to be a pitiful 2.5% cut is just creating more work when I simply do not need it.”
High street sales fell more sharply than expected in the first half of November, according to the Confederation of British Industry.
Following the government’s pre-Budget announcement and subsequent u-turn over excise duty, the Wine and Spirit Trade Association said shoppers will spend more on wine.
