"I am sure that most retailers in the CTN business didn`t reduce prices when the rates altered before and possibly made a little bonus out of it.
"I am trying to get my head round the consequences of not raising my prices come January, and wondered if I maintain my current stock values then I could be out of pocket as we are now an off licence and are holding several thousand pounds- worth of extra stock."
I established that John was on the point-of-sale VAT scheme and surmised that he could stockpile now and sell at the higher rate come January as shoppers would expect a price rise.
But what do I know? I asked the experts. Tony McLeish is manager - accounting and taxation with EKW Group, which writes a regular column in C-Store's sister paper Forecourt Trader.
He says: "If John is using a point-of-sale scheme, the rate of VAT on his purchases is irrelevant because he claims it back as input tax. His true mark-up is the difference between the cost of purchases net of VAT and his net selling price.
"If he absorbs the 2.5% VAT increase by not increasing his prices in January 2010 his margin will be reduced by the same amount, regardless of whether the goods were purchased at the 15% or the 17.5% rate. Therefore, there is no margin advantage in stockpiling 15% rate goods or reducing stock either on a point of sale scheme."
I'd be interested to hear from more of you on this subject. Have stockpiled on aspirin.