Hours of extra work, disrupted profit margins and increased potential for customer aggravation - all for the sake of 1p off a Mars bar. Retailers are counting the cost of the cut in VAT to 15%.

Retailers' views
What should government really be focusing on? lesley brown

Frankmarsh Stores, Barnstaple, Devon “I think the government should reduce National Insurance contributions. It would enable small businesses to take on more staff.”

Chris Fitzpatrick Fitz’s General Store, The Wirral, Merseyside “It should review the small business and empty premises rates as they are unfair to those who have been forced to close up.”

Alan Fincham. Londis News Extra, Attleborough, Norfolk “More flexibility regarding tax on employees would be a good thing. Staffing is one of our largest overheads and we don’t want to be forced to cut back.”

Derek Gilpin. Post Office and Grocery Store, Frizington, Cumbria “Start taking care of small businesses. We just seem to be working to pay everyone else, be it banks, accountants or government.”
The new rate comes into effect next Monday, December 1, and will last until the end of 2009. In his Pre-Budget Statement to the House of Commons this week Chancellor Alistair Darling said that alcohol and tobacco duties would rise, but retailers were left struggling to update VAT reports on half of a typical c-store's entire inventory.

As C-Store went to press on the evening of the Chancellor's announcement, store owners were preparing for a period of major disruption.

Lesley and William Brown of Frankmarsh Stores in Barnstaple, Devon, will be seeking financial advice to help them cope with the impact of the cut.

Lesley told C-Store: "We'll be contacting our own accountants for advice and also the legal helpline, but I expect they'll be inundated with calls. We're really unsure what it means for us as we have an epos system in our store and while we can change the VAT level on it, we'll have to change every product affected by the decrease individually."

Ken Thomas, who runs Arkwright's in Highworth, Swindon, said the VAT reduction would be more disruptive to retailers than it would be helpful to consumers.

He said: "I can't see it being that much of a difference in price, but unfortunately between our store and website we'll have to change the price of more than 6,000 product lines. Even with epos, it's going to be a lot of work."