Certain queries make my heart sink and my head hurt. VAT is top of the list. But I am heartened to hear that others find it puzzling, too. John Turner, who runs Turner's Newsagents in Leeds, emailed the following: "I wondered if you could find out if there are any advantages to running stock levels down leading up to the VAT change in January 2010.

"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.

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