The government is set to give retailers 28 days to change their prices when it returns the VAT rate to 17.5% on 1 January.
Provided retailers display a general notice informing customers prices may be higher than suggested by signage due to the increase in VAT, they will not have to immediately update POS if the change in policy passes consultation.
Trade bodies including the British Retail Consortium and Association of Convenience Stores supported The Grocer's campaign to delay the onset of the VAT hike, as did Tesco, Sainsbury's and Marks & Spencer.
"While this move will not benefit retailers nearly so much as delaying the rise in VAT until February, this is a very welcome concession from the government," said Adam Leyland, editor of The Grocer. "Retailers will no longer face having to update thousands of prices during the busiest trading period of the year, and will be spared the worry of prosecution if shelf prices are lower than prices at till due to VAT." The ACS also cautiously welcomed the move.
"This small concession will provide some greater flexibility for retailers and we will support it," said chief executive James Lowman. "However, the decision to reinstate a 17.5% VAT rate on the 1st January 2010 will cause major and costly disruption for retailers on a bank holiday in the middle of the busiest trading period of the year. We have called on Government repeatedly to delay in the changeover of the rate to 1st February 2010."
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