In advance of next week’s Budget, BHF Group has put to the Chancellor that the return of standard rate VAT from 15% to 17.5% should be deferred by at least 15 weeks – and ideally by 15 months.
The trade association’s letter says that the return to 17.5% should not take place at the turn of the year, during the sale season, but be put off for 15 weeks to early April. The letter points out that this quieter period helpfully coincides with the end of the tax year.
And it goes on: “While the Centre for Economics and Business Research argues that as the rate cut to 15% has resulted in £2.1bn in extra retail sales it should be extended for a further six months. We would go further.
“The rate cut was introduced as an emergency measure in a crisis. We are still in the crisis. The reversion would be best left until the crisis has passed and recovery is well underway, not to be undone by the sudden increase to 17.5%.
“Rather than extending the period by just 15 weeks, BHF Group believes that it should be extended by a full 15 months, to April 2011.”