COMPANY LIQUIDATION FEAR FOR RETAILERS AFTER VAT RISE

Retailers are set to be hit hard in 2011 as a result of the increase in the standard rate of VAT from 17.5% to 20% which experts forecast will lead to a greater number of company liquidations. rnThe rise which came into force on 4th January 2011, will affect any VAT registered firm that buys or sells goods or services that are subject to the standard rate of VAT. The majority of food products, children’s clothing, newspapers and magazines will continue to be zero rated. rnResearch by the Centre for Retail Research and online shopping group Kelkoo has suggested that retail sales will fall by about £2.2bn in the first three months of the year as a result of the rise. rnShoppers are unlikely to feel the effects immediately as retailers are likely to absorb the costs as part of the January sales.rnA spokesman at Jennison Liquidation said “Retailers had a tough time in 2010, especially towards the end of the year, when an expected increase in sales prior to the VAT increase was anticipated only to be over shadowed by the severe weather. The first three months of 2011 does not look to show a more positive outlook, the combination of the VAT rise, coupled with the public sector cuts means retailers are fearing the worse and liquidations are a real concern.”rnIf you feel your business could suffer as a result of the VAT increase and would like some independent advice please contact Jennison Insolvency on 0800 107 8788.