Which retailers will abuse the VAT increase next month?
On January 1st 2010, VAT on goods sold increased from 15% to 17.5%. The lower rate had been introduced by the Government in December 2008 in a bid to stimulate retail sales, and while the there was no obligation to change prices, there was plenty of shenanigans going on.
For example, when VAT was lowered to 15%, H&M manually passed on the discount for a couple of months before continuing to charge at the higher rate of 17.5%. When VAT was increased back to 17.5% at the beginning of 2010, H&M told customers their prices would not increase and that H&M would pay the difference themselves - even though they were already charging customers 17.5%.
It was a cheap stab at positive PR by H&M, and more of the same is surely on the way. In just over a fortnight's time on 4th January, you can expect more companies to spin the latest increases to their own advantage, with businesses citing the introduction of 20% VAT to justify unwieldy increases. Some are already at it; Fitness First have told members the increase is forcing them to increase membership rates, but rates far outstrip VAT.
So once again we're asking avid readers to help us spot those retailers who play unfair by consumers, who say they're reacting to VAT increases but use it as an excuse to ramp up their price tags. We're not bothered about retailers rounding up to the nearest penny, or those that have the decency to admit their prices are increasing regardless - we want those that deliberately mislead their customers.
Keep an eye on prices as they are now, and get in touch if you spot VAT-related shenanigans in January by emailing [email protected]