New Vat rate

From next week the UK vate rates will drop from 17.5% to 15%, for about a year apparently. The hope is that retailers will pass on this reduction to consumers, but bearing in mind the short notice that may be hard for some.

The hope is that this will boost spending, I certainly plan to boost mine (I am thinking of a Samsung NC10 netbook for starters). Will you be splashing the cash?

The government being the government and having a governmental grip on reality are calling it a 2.5% price reduction, whereas any halfway competent finance/maths/common sense person knows its really only 2.13% (2.5/117.5). I’m not sure how dramatic an impact in spending a 2 percent discount will have.

They reckon it will take many years to pay back the debt this little gift will cost. I think a lot of that cost will be caused by people having to pick through their systems searching for *1.175 and *(1-1/1.175) etc and replacing with the .15 version.

Our main rate of Vat has been 17.5 for so long I’m sure this is going to shake out all sorts of previously hidden sins.

Opportunity perhaps?



19 Responses to “New Vat rate”

  1. Bob Phillips Says:

    Simon, as an IT guy you should know that any system that has 1.175 or any variation of it coded into their system deserves whatever happens to them. If they have got a table driven set of vat rates then they are stupid. We already have 3 VAT rates, so systems should already be flexible, nobody ever said they were fixed. Did the millenium problem teach us nothing about hard-coding?

  2. Bob Phillips Says:

    BTW, I love the pedantry. It is like saying the reduction in the BoE bank rate, from 5% to 3.5% is a fall of 1.5% fall. It may be 1.5 percentage points, but not 1.5%.

  3. Charles Says:

    Need to change my web purchasing system: moment of panic as I try to work out where in that ASP code Ben wrote back in 2001 is the VAT calc … Is it in the DB? Or in the code?

    Phew, found it. That looks easy to fix … just have to remember to do it at 1 minute past Midnight on Sunday.

  4. MIchael Foord Says:

    The real fun will be coping with mixed VAT rates around the boundaries where it changes.

  5. Simon Says:

    I see hardcoded vat regularly.
    The other issue is this now adds a time dimension to VAT when modelling which makes things much more complex.

  6. Patrick O'Beirne Says:

    “Opportunity perhaps?”
    Certainly ClusterSeven and Trintech were quick on the PR releases.
    I’ve just updated my ScanXLS web page :-)

    Might give rise to some new stories for

  7. Ross MIE Says:

    I didn’t even think a bout this when I heard the news, I would bet my life on there begin loads of SS with 17.5% hard coded!

  8. Martin Rushton Says:

    Given the current scenario of
    8.50 +1.49 vat = 9.99
    I suspect that
    8.69 + 1.30 vat = 9.99
    is just as likely to be seen as the Governments intended
    8.50 +1.28 = 9.78
    which sort of defeats the object (retailers like .99 or 9.99 at the end of their advertised price (which in the UK must be VAT inclusive)) .

    What also defeats the object is, as Simon has pointed out that for every £100 spent on Vatable goods, in the cases where the retailers haven’t used the opportunity for a “hidden” price rise, the saving is £2.13. That’s sure going to encourage me to splash out, NOT! I can’t even drown my sorrows in the pub with a pint on that saving because the Government have at the same time raised the excise duty on alcohol which means that £2.13 pints are few and far between.

    An oppurtunity for developers, yes. We haven’t learned from the millenium bug.
    An opportunity for retailers to raise margins, yes.
    A method of stimulating spending, the jury is out but I think it will be a no.
    A method of shackling all residents of the UK with an excessive per capita national debt, most certainly.

    BTW the leak that the Government was considering raising the rate to 18.5% in January 2010, instead of restoring the 17.5 doesn’t fill me with confidence that it won’t actually be 20%

  9. Adam Vero Says:

    I think there is a possibility for some work here, especially if people have complex spreadsheets, macros (or full blown databases or LOB applications) which they don’t understand. While the scale is clearly far smaller, for some this is just as terrifying as the millennium bug (if not more so given the very short notice).

    It almost makes me regret all those solutions I have put in with a nicely named range called VATRate which stores an appropriate value (or points to a cell containing the value where the client needed the extra visibility and ease of changing this). I say almost, as my professionalism would not allow me to deliberately put something in which only I can maintain. I firmly believe in giving people the tools, and handing over the skills, to be self sufficient after I deliver the goods.

    I suspect some people will have spreadsheets with loads of figures hard-coded into them as VAT-inclusive values, with no calculation of any kind. I have posted a piece on my blog with a couple of suggestions on how people can replace those values with corrected ones.
    Tiny URL:

    Given that the idea of the post was for people to be able to do this for themselves, I proposed that Paste Special > Multiply is probably the smartest way to do this.
    The alternative might be to write some code to do this if there are few sheets with very many values, or many sheets which are identical (or sufficiently similar). Otherwise I suspect the development effort might outweight the time savings.
    Any thoughts from people here?

    Martin, if retailers keep the difference (as I agree is likely to happen, particular at the smaller end of the market) this is not defeating the point.
    The point is to keep businesses in business (and profitable). If this is achieved by convincing people to go and buy more things, that’s good, but if it just means the shopes make more when they buy the same stuff, that can be good too – the retailer gets to make some money, keep their staff in employment and give them pay rises to compensate them for the rising costs of living.
    I totally agree with you that this is just a debt for the future, like spending on a credit card with a low “introductory” rate. Let’s hope it stops at 20%…

  10. Rob Bruce Says:

    Of course it’s just a debt for the future. It’s just a gigantic payday loan. We’ll have to tighten our belts eventually, but at least the kids won’t be eating toast for dinner all next week.

    I hope.

  11. Ross Says:

    Why should we be in debt? SURELY!!!! We will make that money back from the banks we know own?!?!?!?!?!

  12. Harlan Grove Says:

    Maybe all the countries now trying to deficit spend their way out of recession could take a small, symbolic step towards offsetting future deficits by reducing the pay of current and pensions of former legislators and administrators? I know, pipe dream, but pleasant to consider.

  13. Simon Says:

    Message from my hosting company:

    “We will, of course, adjust the VAT payment rate and your invoices
    will reflect the new rate, however due to the way that the system
    is built and the way that payments are processed it simply is not
    possible for us to reduce the payment amount by 2.5% of the VAT
    rate. Accordingly we will not be reducing the payment total. Your
    invoice will show the VAT at the lower rate however. ”

    ie they are keeping the 2.5% windfall because their billing system is too shit to adjust!

    Now if I was not vat registered that would be a zero change in (gross) price, but because I am, it is actually a 2% increase in net cost!

  14. dougaj4 Says:

    To me that looks like a seriously bad ploy on the part of your hosting comapny. My immediate reaction would be:

    1. If your billing systems are that crap, are the rest of your systems any better?
    2. More likely there is nothing wrong with your billing systems, and you are just looking for an easy way to increase your margins.

    Either way, I don’t think I want to do business with you, so good-bye.

    But more than likely I’d end up deciding I couldn’t be bothered and just wear it, which I suppose is what they are banking on.

  15. Giles Says:

    IMO a lot of the time hard-coded VAT rates and the like are unavoidable; not in the carefully-crafted spreadsheets we produce ourselves, of course, but in the things that have grown organically, starting as someone’s scratchpad when they were playing with ideas one afternoon but eventually becoming part of the core data-processing infrastructure for a business…

    I spent some time putting together a Resolver One sheet that gives you a table-based “VAT rate over time” function (on my blog, see above) and I was wondering – is there an equivalent way in Excel that you could keep all of the VAT information for every spreadsheet you write in just one sheet? Perhaps a VBA function that you could include?

  16. Bob Phillips Says:

    Doesn;t the Samsung NC10 come with XP pre-loaded?

  17. Simon Says:

    Yep but I think you can just about get Ubuntu working on it.

  18. Mr.Samsung Says:

    After carefully reading reviews on the web and YouTube i found out that the NC10 is the best netbook all around. I bought it along with the Crucial 2GB memory both for $489, as soon as it arrived i changed the memory module and i have to say that its way too easy anybody can do it. After fully charging the battery and setting up the OS i was very impressed.

    -Amazing battery life mine lasted a little more than 6 hours at normal performance.
    -You can select between Max battery life, normal and max performance which is great for saving battery life.
    -Great recovery tool, it saves the initial state of your laptop in case anything goes wrong you can just go back to the beginning
    – The keyboard is great, and the keys are in the right place unlike some other netbooks.
    -The screen is very bright and can be adjusted, also its not glossy so you don’t have the usual glare when using it outside and its very bright when using it outdoors.
    – Bluetooth and Wifi (The NC10 gets a better signal than my HP notebook).
    – It runs fast.
    – Great touchpad gestures.
    – Very nice design i specially like the front led’s at night.
    – Integrated webcam and the software for it is good, it allows you to record video and take still pictures.
    – Great connectivity: 3 USB, Ethernet, External display, mic, headphones, Memory card reader, Bluetooth and Wi-fi

    – You have to get used to the keyboard and keypad, the touchpad is small, takes a little bit of getting used to but the touchpad gestures make it way easier to use and you get used to both pretty quickly.
    – Was unable to install Adobe Illustrator due to the resolution of the screen (basically the screen is too small for that program) but not to worry i have it installed on my other computer.
    – The memory card reader is not compatible with the Memory Stick (MS) format it only accepts SD, SDHC and MMC.
    – Requires an external CD/DVD reader, but that’s to be expected on a netbook.

    Its a great netbook specially because of the battery life, great for traveling and moving around, i really appreciate the freedom it gives you since my old laptop’s batteries where old and gave up in only 40 minutes, now i have 6 hours of use, its very fast with 2GB (i highly recommend buying it along with the 2GB memory).

  19. Frank Says:

    The Samsung NC10 is a bit more expensive than its rival, the Acer Aspire One. Even though a cursory glance shows that they have the same features.

    The Features that made this a better buy than the Acer Aspire One:
    1. The 10.2 inch screen. the 1024×600 resolution seems to perfectly match the screen, graphics do not seem crammed inside the screen.
    2. The Keyboard. While most people shout from the rooftops about the full size right shift, I am left handed, so that did not matter. The keys are a pleasure to type on, springy enough to avoid tiring your hands.
    3. Bluetooth. Tether to your favorite phone and hit the road with 3G/EVDO goodness.
    4. Finally, the Battery LIFE! It is amazing, thanks to Samsung’s Battery monitor. I played CounterStrike 1.6 for 4.5 hours straight before getting bored. Doing late night homework, I started at 5, and at 12 I still had 22% or about an hour and then some remaining. As I typed this, I have 82% remaining, 5:45 min relative time.

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