Return to 17.5% VAT at festive period 'insane'

Published on Wednesday 17 June 2009 21:24

EMBATTLED retailers say UK government plans to return VAT to 17.5 per cent on Hogmanay "insane", it was revealed yesterday.

Businesses fear that increasing the tax from its temporary 15 per cent during the key sales period will cause chaos and put further strain on the struggling industry.

The British Retail Consortium (BRC), which represents a number of the country's largest firms including Marks & Spencer, has urged the government to postpone the rise for a month to limit disruption to the industry.

According to the BRC, the imposition at the end of the year could cost the sector around 90 million and cause huge upheaval for firms that would have to reprice their products during such a busy time.

Sir Stuart Rose, executive chairman at M&S, said the government should discuss the timing of a return to the 17.5 per cent rate with retailers.

He added: "Increasing VAT on New Year's Eve is an insane time. If the government had any sense, they would delay it for a month. The tax rise is at the worst possible time – right in the middle of the sales period."