The VAT Switchback – How to Survive It

By Leodora Darlington

“Value Added Tax (VAT) is a tax that's charged on most goods and services that VAT-registered businesses provide in the UK. It's also charged on goods and some services that are imported from countries outside the European Union (EU), and brought into the UK from other EU countries.”(www.hmrc.gov.uk)

The credit crunch saw the VAT standard rate axed from 17.5% to 15%; however, January saw the return of a 17.5% standard rate. Firstly, some important basic facts. Goods or services subject to reduced or zero rated VAT are not affected by either of these changes, and never should be. Such items are:

• Food

• Books

• Young children’s clothing

• Children’s car seats

• Magazines

• Animals

• Animal feed

• Lottery tickets

• Sport activities

• Plants

I t was a popular complaint that the reduction in VAT was an inconsequential one, and that it wasn’t saving the general public much money at all, however, since it has gone back up, customers are certainly feeling the pinch when bills are being posted through the door. One good way to fend off the extra 2.5% VAT is to frequent money saving websites such as www.pennypinchinghints.com where there are several coupons available to download on a regular basis.

Better still, think of shopping around for better insurance and television provider deals on sites such as www.moneysupermarket.com, www.gocompare.com or www.confused.com. Accustomed to a life in a society where most things are easily accessible and simply easy in general, we find it a chore to hunt too extensively for good deals; however these sites compile the information of several companies and put them all in one place, which means minimum hassle and optimum results – possibly saving an individual hundreds of pounds.

Another good idea is to prepare when you know you are going out to shop – lists really do make a difference. Without them, the average consumer will buy a lot more than they need, picking up items at random that they think they would like. A list brings focus to a shopping trip, avoiding the purchase of unnecessary items.

(sourced from http://www.searchenginepeople.com/blog/ill-take-coupons-for-500.html)

To finish, just in case you feel that the recession has hit your business a little harder than expected, here are Tenon’s Top 10 Tips on how to save your business:

1. However positive things are, have a “Plan B” – in case the business is hit by something unexpected;

2. Act, don’t wait for things to get bad before putting plans in place;

3. Cash is king: have the best cash management approach - it’s simple and is the most important part of the business;

4. Know where things are: make sure financial records are robust and up to date;

5. Have the best possible relationship with the bank – it’s essential they are fully aware of the business’ financial situation;

6. Take a new approach to tax – question what can be done to improve tax cash flow and ease payments and consult an adviser;

7. Even if demand is slow, always be in control of costs: know which are variable, can be acted on and how;

8. Rehearse the most difficult conversations that may need to be had with suppliers, clients, customers, employees and financiers should the worst happen;

9. Check employment terms and recognise who are the essential members of the team;

10. Price properly - don’t over-react to market conditions, understand whether demand is price-sensitive and don’t give profits away.

(sourced from http://www.bytestart.co.uk/content/24/24_6/business-recession-tips.shtml, originally from http://www.tenongroup.com/)