VAT rate change could cause website chaos
The Chancellor has announced a cut in the rate of Value Added Tax (VAT) of 2.5%. This takes the current rate of VAT to 15% and is the first change in the VAT rate since the early 1990s.
Back in the 1990s, ecommerce didn’t really exist and so many of the ecommerce systems that have grown up in that time have had the rate of VAT hard coded into them at 17.5%. Many companies will be realising that their ecommerce system cannot be updated without the intervention of a programmer (and his hourly rate!).
Ordinarily, this wouldn’t be a problem but the fact that the rate change comes into effect on the 1st December means that there is likely to be a frantic rush to get these systems working properly in time.
Remember the Millennium bug, which required millions of hours of programmer’s time to prepare for? Well, we may see something similar, but with only 6 days to prepare for it.
Come the 1st of December we may well see a few high profile red faces as companies fail to get their software working in time. Imagine the shame of a company like (say) Amazon when they have to admit that VAT was hardcoded into their system at 17.5% and they haven’t been able to change it in time! Conceivably, their entire operation could ground to a halt unless they can manually overcome the difficulties.
I’m sure the government didn’t see this coming. Come December 1st we’ll see which companies have properly prepared for it in the short time available.