Retailers pay high price for VAT cut

Although most retailers found the implementation of the change in their finance systems was fairly painless, they took a hit totalling several thousands of pounds from the cost associated with changing price tags, communicating price changes and setting a round number price point to items. Some of this additional cost also came from customer refunds.

In a poll conducted in December, Coda said it found many of its retail clients – which include big high street retailers such as Debenhams, Ikea and Next – did not believe the VAT cut would have any effect on Christmas sales and said these business would face the same problem when VAT rates were restored in 2010.