VAT Action Alert for All E-Commerce Websites!

Allan Bisset

The government’s long anticipated and much leaked pre-budget report has finally seen the light of day.  It contains pretty much what everyone thought it would:

  1. VAT cut from 17.5% to 15% effective as from  Monday  December 1st for 13 months  - that’s reckoned to be worth about £12.5bn in consumers' pockets in time for Christmas.
  2. Top rate tax rising to 45% and all National Insurance contributions to go up 0.5% from 2011.
  3. Increased duties on alcohol, tobacco and petrol so they remain roughly at the price they are now
  4. Growth forecasts for next year slashed from + 2.75% to between -0.75% and -1.25%
  5. Government borrowing to double to £78bn this year and £118bn next year, before starting to come down, with the books not balanced again until 2015/16

Of course we in the Internet Marketing business are affected by all these measures because we’re human beings too (despite what you may have heard!)  who drink, smoke, drive and pay taxes and here at Fresh Egg we do appreciate Mr Darling wanting to soften the blow of a recession with the UK economy officially set to shrink next year.

But it’s the first measure that has the greatest impact on all net users and businesses.  Obviously, if you own and operate any e-commerce site, you’ve got less than a week to change your prices to accommodate the new rates of Value Added Tax. That’s probably easy enough to do in a shopping cart, but could prove a time consuming process throughout the rest of your site.  Either way, it’s got to be done by Monday December 1st if you want to be in business!

Far more intriguing is the possible impact this will have on volumes of business transactions online.  It will be fascinating to see if this current week (November 24th - December 1st) is the slowest for transactions in the history of Internet trading!  After all, why would a prospective customer want to buy now, when if they wait a week they’ll get it cheaper?

All the more reason that you need your  site ready for the deluge to come on December 1st!  Yes, I’m prepared to do my Keynesian bit to spend money I don't have (just as old John Maynard said that governments should do) to save capitalism, but not until Monday, and not on a site that has incorrect prices!

What pleases me immensely though is the fact that, for the first time ever, my procrastination has paid dividends!  Unlike relatives and acquaintances, who are organised and have bought most of their Christmas gifts months in advance ,  now I can claim it was economic foresight (rather than sheer sloth and laziness) that prevented me from doing my Christmas shopping until the last minute!

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