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Tories, retail ISVs decry Darling's VAT cut

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George Osborne has described Alistair Darling's pre-budget report as the largest ever borrowing by a British government and leaving a tax bombshell timed to explode as the economy recovers.

He proclaimed that "prudence is dead", and said PM Gordon Brown's claims to have abolished boom and bust were ludicrous. He said the measures were motivated by politics, not economics.

He described Darling's claim that the recession was America's fault as nonsense and that the government had mistaken a boom as stability.

On the VAT cut he said Germany and France have ruled out a similar move and many retailers, already selling stock at 25 per cent off, were not impressed either.

In response, Darling damned Osborne for failing to provide any actual proposals in place of the government's.

For an IT angle we turn to retail system provider Coda, which warned that its customers were unprepared for such a change. Coda said the changes risked sparking problems in retailers' IT systems, the time and cost associated with changing price tags (assuming they wish to pass on the cuts), setting a round number price point and handling customer refunds.

David Turner, Group Marketing Director at Coda, said: "They usually have months to prepare for this kind of thing and test the associated systems, but introducing it at this time of year will cause a huge amount of confusion. Retailers generally 'lock-down' their systems in the run up to Christmas, to avoid the risk of IT failures in their busiest trading period.

"Although the VAT changes are simple enough to make within the accounting system, there are other complications... Retailers in very seasonal areas like shoes told us they may have to wait until the next season's stock comes in, early next year, before changing prices at all." ®

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