Newsletter 44

Online retailers have remained relatively silent on the implications of the 2.5 per cent cut in VAT on 1 December, but according to some estimates, it will cost the big high street grocery chains around £2 million each in administration costs to make the change.

Shopcreator, which hosts e-commerce sites for many online retailers, says the change will have caused significant problems for those etailers using “hard-coded” content management systems, since the prices set up for their products will in some cases have been “virtually impossible to amend”.

Its own hosted system, as you might expect, allows across-the-board updating of VAT prices, and the company says it worked “against the clock” to update all relevant pricing on the sites it manages in time for the deadline. It provided the upgrade free of charge.

It is reported that the Treasury itself put the price for the VAT change at around £150 million, including re-pricing, system updates, extra checking and staff retraining. Consultancy Deloitte has calculated that the overall saving for a consumer on an annual salary of £25,000 will work out at around £170 a year.