Vat cut

"mogga" wrote

Theoretically, a 2.5% drop in VAT could allow a

2.128% drop in prices (eg 117.50 down to 115.00).

But watch for traders splitting that with their customers by increasing the VAT-exclusive price by (say) around

1%, so that prices would only drop by around 1% !

Nonsense. You know fine well that a 2.13% drop in prices would require a 14.3% drop in VAT. :-)

Oh, so my receipt from (e.g.) the car rental company will still say cost of hire: 59.57, VAT: 10.43, total: 70.00 will it?

(and this is a personal purchase for me)

tim

Which part of "except to the end user" did you not understand, end user?

You seem to have a problem with sentences.

There's two questions and two answers. You seem to think that the answer to the second question relates partly to the first question.

Systems will need changing to reflect the change in the VAT rate.

I understood end user to be me, not the person printing the bill.

Otherwise the statement "No systems need changing" is false, because the system belonging to the person printing the bill does need to change (which is the point that I was making)

tim

No, the *system* doesn't need changing. What *does* need changing is a data value in the system, telling it what rate of VAT to apply. The method of calculating the invoice is unchanged - but the result will be different.

Yes, you can have great fun with percentages - depending on what you take as the base.

I remember when I was still at school - must be nearly 50 years ago - there was a discussion on 'Any Questions' on BBC R4 (probably the Home Service in those days - or might even have been the Light Programme, later to become R2 - no matter) about the fact that the bank rate had gone up from 5% to 7%. Some panelists were asking why there was such an uproar about a mere 2% increase. I wrote to 'Any Answers' pointing out that the increase was actually 40% - but they never published my letter.

I'm quite interested in how this pans out as well.

I would imagine the treasury will have modelled the impact, but I imagine they will have had difficulty accounting for human nature.

Ideally shops would reduce all their prices accordingly (just imagine how much work it would be changing every price label in every shop in the land!) and consumers would increase their spending by the amount they are saving, stimulating the economy.

However that wont happen. Many retailers will simple trouser the difference and use it as an antidote to their own credit crunch. Many people in debt who have had the scare of their lives will put any savings towards their credit cards.

So I remain to be convinced it will do what it claims, other than increase the reckoning in the future.

Neb

Indeed; in the system we use at work, it's in Pricing/Pricing Parameters/Tax Rates/UK VAT Rates.

Change 17.5% to 15%, confirm the effective start date and click ok?

About 7 seconds work.

This rather depends upon what is meant by "system".

tim

Not in the slightest. I'm a big fan of sentences.

Well, I didn't and don't think that, nor can I see how I can have seemed to think that.

There were indeed two questions (by mogga) and two answers (by Troy), being one answer to each question. Then there followed one comment (by tim).

I addressed only that comment, which I took to refer to the second answer only. Mind you, I suppose it's possible that the comment referred to the first answer only. Either way the comment was inappropriate, because ...

... as someone else has already pointed out, systems do not need changing. The system was conveniently designed to incorporate knobs, and all that would be necessary is to adjust one of them (this doesn't change the system, it only changes the answers it spews out). OK, so some difficulty could arise from the fact that the relevant knob has not needed to be adjusted for nearly two decades and has, in a manner of speaking, "rusted solid". Knowledge of how to twiddle it has atrophied. That's hardly the system's fault.

"Ronald Raygun" wrote

As tim pointed out, that ' rather depends upon what is meant by "system". ' A system could be considered to include both 'algorithm' + 'data'. You obviously seem to consider a system to only encompass the 'algorithm'...

So what do *you* mean by "system"?

*I* mean the combination of computer hardware and software which enables invoices to be created. Neither the hardware nor the software needs to change - so no re-programming requirement. You simply need to change a value in a data table. As someone else has said, a mere few minutes' work.

It's comparable - though simpler - to the changes which have to be made to payroll systems to cater for tax rate and threshold changes from year to year. No decent system will have the actual values hard coded into the software.

On the back of the cig packet maybe!

How many won't bother? And will just in effect up their prices?

How much of the poundshop stuff is VATable?

Alternatively, even if one considers "system" to include both algorithm and data, it rather depends on what is meant by "change". One might say that altering a data value amounts merely to tuning the system, not changing it.

The problem with the 20 year delay is that the 'system' used now will be different to the system that was used last time. More things could be centrally controlled by some "head office" system or perhaps things have become more "distributed" with the death of mainframe computing. And then there is the "web" interface, which wouldn't have existed more than five years ago. I don't think it's quite as simple to "roll out" this change as people believe it to be.

tim

>

That makes the *huge* assumption that the VAT rate *is* in a table somewhere rather than hard coded in the 'system' as you call it (though I would argue that the data is just as much part of the system as the code is). I think it's quite likely that there are more than a few 'systems' where 17.5% is just a value in some javascript or HTML.

In payroll systems the values are expected to change frequently, annually in fact.