Tag Archives: VAT

Chancellor’s statement shows a glimmer of hope

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George Osborne’s autumn statement was an opportunity for the government to return much needed confidence to the retail sector to boost growth. The Chancellor’s statement questions the conventional wisdom that countries can spend their way to economic prosperity, as reference to consumer spending is almost completely bypassed.

Last week’s concerning official figures published by the Office for National Statistics paint a worrying economic picture for the retail and distribution sector. The figures were followed by a warning from the British Retail Consortium that the ONS were in fact painting a far rosier picture than they were hearing from their members.

Kevin Flood, co-founder and CEO of Shopow, the UK’s largest social shopping site, commented, “For the British economy to start growing it is absolutely vital confidence returns. With conditions still fragile on Britain’s high street, providing greater support for SMEs and freezing the proposed fuel duty rise are welcome. The Chancellor’s proposed extension to rate relief for small firms and the implementation of a credit easing program to underwrite up to £40bn of small business loans will give smaller firms greater confidence. It will not however alleviate the strain on the purse strings of the consumer.

Kevin adds, “The Government needs to review its decision on VAT however to alleviate some of the economic gloom people are experiencing. A temporary cut in VAT would help give consumers confidence to get out and spend.”

The government closes the loophole which allows VAT on small goods

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The government have announced plans which will stop retailers avoiding paying VAT by procuring goods from the Channel Island. This oversight has been used more frequently by retailers selling CD’s and DVD’s online. This loophole was costing the government £140 million a year. Low Value Consignment Relief (LVCR) will not apply to goods sent from the Channel Island to the UK from the 1st April. LVCR set up for tax exemption purposes for goods coming from outside the European Union so that they could avoid paying small amounts of tax, as collecting it would cost the more.

Kevin Flood, the CEO of Shopow said, “There has been an unprecedented movement of demand from consumers for cheap goods such as CD’s and DVDs online, fuelled by the downturn in the economy and lagging disposable income. The closing of the VAT loophole could force British consumers to look further afield for cheap deals.”

Kevin adds, “The closing of the VAT loop hole is good news for traditional British high street retailers such as HMV and Waterstones, who have come under fierce pressure from Channel Island registered online retailers, whose sales models have been taking advantage of the loophole in the VAT rules to offer cut price goods to British consumers. The situation is not at all good however for the run of the mill British consumer, who will quite literally pay the price.”