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The Standard Rate of VAT is being increased to 20% from Tuesday 4 January next year

Sunday 18th July 2010

Make sure that you will be ready for this change

The retail grocery sector is unusual in that, Unlike most other market sectors, Standard Rate VAT is by no means universally applicable.  For example, most food items are zero-rated, while certain products attract the concessionary rate which is currently set at 5%.  Some transactions, such as PayPoint and National Lottery, are even "outside the scope" of VAT, although their effective VAT rate is zero.  Quite a mess, really.

Every EPoS system must be able to apply the correct rate of VAT to every item.  This is essential in order to calculate the profit margin correctly.  For those retailers who use Scheme "F" for their VAT returns, where the output VAT is taken from the actual sales data obtained from the tills, it is also essential in order for the correct output VAT to be calculated.

It is suprising, then, that amending the VAT rate on some EPoS systems is a major undertaking, possibly even requiring the use of a CD sent out specially by the system's supplier.  One of the hallmarks of a good EPoS system is that it is not difficult to make simple changes to such items as VAT rates.  With the best systems, it is merely necessary to access the screen displaying the VAT table data and key in the new rates as may be required, then click the "Update now" button.  The system will recalculate any changed margins and offer to create price changes where appropriate.  

Although there is still plenty of time before 4 January 2011, this is a matter which should be investigated now.  Once the busy Christmas period starts, it will be all too easy to forget about the VAT change.  The result?  You will be liable to lose money hand-over-fist on tobacco products, in particular, until you do remember to deal with it.