Managing the VAT reduction to 15% with StoreTraderLive
The November 2008 Pre-Budget Report announced a reduction in the standard rate of VAT from 17.5% to 15.0% with effect from 1 December 2008. This note describes the implementation options available to StoreTrader users.
Summary
There is one necessary step and that is to reduce the VAT rate assigned to the standard rate tax code.
There are then three options available to StoreTrader users and these are…
1. Do nothing. This will have the effect of leaving the price the customer pays as ticketed, but reducing the VAT element charged, so increasing the retailer's margin. It's the simplest action, but won't give the customer the 2.5% VAT reduction he may be looking for.
2. You can reduce all the prices of all the items in the shop by 2.13%. This will have the effect of reducing the VAT rate included in the item price, but it will mean re-ticketing every item in the shop or putting up a sign saying 'all prices charged at the till will include a VAT decrease from 1 December'.
3. You can apply a transaction discount at the till for each sale. This way you underline to each customer the fact that you're giving the VAT reduction. You will need to make sure you exclude items that are not standard rated from the promotion calculation.
To simplify the implementation of options 2 and 3 we have developed a software update that is available to all users. This software update makes it even easier to use the Price Change and Item Search processing in Terminal Manager (Store Server) to support selection of items by tax rate.
Change the Tax Rate
To modify the standard rate of VAT, select the Setup – Company – Tax Rate menu option in Terminal Manager. In the list of records, locate the standard rate record and select it for update. Input the next rate value of 15.0 per cent and the date ‘01/12/08’. The form should look similar to the following…
The VAT rate change can be input in advance as long as the ‘From Date’ value is correctly specified.
Reducing Prices By 2.13 Per Cent – StoreTrader Server
Different guidance applies to users of the standard StoreTrader Server product, StoreTrader Server users who have a Product Link configuration (e.g. Mamut), and users of StoreTrader Server for Sage Line 50. This is the procedure for users who are not linked to accounting systems such Mamut or Sage Line 50.
StoreTrader Server users without links to other systems should use the Update Prices – By Group facility in Terminal Manager. Select the menu option and then, for each group containing standard rate items, select the group and the standard rate tax code as follows…
A list of items will appear. Select the Decrease Price icon on the toolbar. In the dialog that appears now select Percentage as the adjustment and enter 2.13 per cent as follows…
Select the OK button and a list of suggested price changes will appear as shown in the example below…
You can adjust individual prices if you wish. Double-click over a list entry or select the Edit icon and the following dialog will appear…
When you select the Update button, you can choose to apply the price changes immediately or at later date. Enter the date 01/12/08 as follows…
The pending price changes will now appear on the Price Change List report and you should check it. The report looks like this…
The Price Change List report can be used in the preparation of new price labels, shelf-edge labels, etc.
Remember to repeat the procedure for each group containing standard rate items.
Prior to start of trading on 1 December 2008, the price changes need to be applied. This is done by selecting the Update Prices – By Effective Date option on the Terminal Manager menu. Enter 01/12/08 as the effective date.
When the list of price changes is displayed, select the Update button and then the ‘Now’ option. The price changes will then be distributed to the store terminals. Note that if you have very large item files and large numbers of networked terminals you should allow time for these updates to be distributed across the network. Check the Queued Updates option for any terminal to check that the updates have been applied.
Reducing Prices – StoreTrader Server with Product Link (e.g. Mamut)
Ensure the standard rate of VAT has been changed in Mamut and in StoreTrader.
After completion of trading on the prior trading day and prior to start of trading on 1 December 2008, select Interface – Product Link – Import Data and then Interface – Product Link – Process Updates. The price reductions should now be displayed in the normal fashion but the volume of updates will be significantly greater than normal. Select the Update button to apply the updates and distribute them to the point-of-sale terminals.
Reducing Prices – StoreTrader Server for Sage Line 50
Ensure the standard rate of VAT has been changed in Sage Line 50 and in StoreTrader.
After posting of trading activity for the prior trading day and prior to start of trading on 1 December 2008, select Update Prices – From Product in Terminal Manager. A list of suggested price changes with then be displayed in the same screen as that shown in paragraph 10 above. Edit the changes as required.
To create a Price Change List report for the price changes, select Update but choose the option to apply price changes at a later date (01/12/08). Print the Price Change List report and review it. Prepare label or ticket updates.
When the price changes need to be applied, selecting the Update Prices – By Effective Date option on the Terminal Manager menu. Enter 01/12/08 as the effective date. Once the list of price changes is displayed, select the Update button and then the ‘Now’ option. The price changes will then be distributed to the store terminals.
Reducing Prices – Transaction Promotion
Create a promotion record for a transaction promotion with a 2.13 per cent reduction from 01/12/2008 to 31/12/2009. The form should have the following appearance…
This will deduct 2.13 per cent for all transaction total values. However, items that are not standard rated should be excluded from promotion awards in order to not overcompensate for the VAT reduction. To do this, select Item Search in Terminal Manager and on a group by group basis, find the items that are not linked to the standard rate VAT code. An example search is as follows…
A list of items will be displayed in Terminal Manager. Each item can be excluded from promotion awards by opening the item form and enabling the field and disabling the ‘Promotion Allowed’ field in the ‘Restrictions’ option group as follows…
This approach may not be practical if there are a lot of zero-rated or exempt items to be removed from promotional awards. If this is the case, an update import data file can be prepared and you should contact Pacific Retail or your StoreTrader distributor for advice and assistance.
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