Retailers call for delay on VAT and business rate hikes

The chancellor should delay the VAT increase and freeze business rates, the British Retail Consortium (BRC) has said.

The group's call comes ahead of Alistair Darling's second Budget, due to be presented on 22 April. It said that the reversal of last November's VAT cut to 15%, currently planned for 31 December, would come at the "worst possible time" for retailers - falling in their busiest period.

In its Budget submission, the BRC said that reintroducing the 17.5% rate at this time could cost the retail sector around £90 million, and it urged the chancellor to delay the rise by at least a month.

Stephen Robertson, BRC director-general, said: "Changing VAT rates back to 17.5% at the end of December will soak up a lot of effort at the busiest and most important time of year for most retailers.

"It's a time when staff should be focusing on serving customers."

The group is also calling for a freeze on business rates, which are due to rise 5% next month.

It said that the annual increase, together with charges on empty properties and the introduction of business rate supplements, could leave retailers facing a 30% increase in business rate bills by 2010/11.

Following protests by some of the country's biggest retailers last week, Chancellor Alistair Darling wrote to Retail Week. He said that there are no plans to amend the proposed rates system in 2009-10, and added that a freeze could cost the Treasury almost £1 billion.