VAT Cut Implications for Ecommerce Sites in the UK
Date: 24.11.2008In todays pre-budget report the Chancellor has introduced a reduction in VAT rate from 17.5% to 15% to help kick start the economy and increase consumer spending.
VAT has been set at 17.5% since long before ecommerce was invented and this recent change is going to cause significant challenges for ecommerce websites.
Some eCommerce systems are likely to have VAT hard coded into the ecommerce systems but even very advanced programs will still need to be adjusted to reflect the new rates.
A number of retailers without a retained website development company will be unlucky enough to have the VAT rate hard-coded into their CMS. This makes price changes before next Monday almost impossible.
Another major issue will be updating image and flash based banner adverts - a number of which have prices included in them. Most small businesses do not update banners or flash animations on a regular basis and many will have been using the same ones for years. Unless the company has retained the original designers and/or source images, making changes to these will be either impossible or difficult at best meaning prices will be uncompetitive from next Monday.
Fixing banners in a multitude of sizes and re-uploading them to ad-servers across the web is not a quick task.
As we look into this, more and more implications spring to mind. The Google Adwords Pay Per Click (PPC) campaigns that are run by the likes of Bite Digitals Search Engine Optimisation Manchester team, often have prices in them, Google Product Search feeds will all be wrong straight away.
Conversion rates for shopping carts displaying 17.5% VAT next week will plummet. Visitors will just go straight to competitors websites.
For help with VAT, ecommerce and banner adjustments contact Bite Digital, the eCommerce and Search Engine Optimisation Manchester team today.
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