Toy sellers' double boost from VAT cut turmoil

The move to slash VAT could be particularly good news for Britain's struggling toy sector, which is now in line for two good Christmases on the trot.

With the shopping industry reeling from the recession, Chancellor Alistair Darling claimed the move to cut VAT from 17.5% to 15% until the end of 2009 would be a major aid to the UK high street.

Some retailers are sceptical that the hassle will be worth the benefit.

But toy shops sell most of their goods in December, a month that benefits from the VAT cut twice in two years.

Retailers were mostly thankful for the move, but they say it will cause logistical problems and could upset the usual retail calendar. Shops rely on a pre-Christmas boom in November and December, which they then follow up with the January sales.

But the end of the VAT cut could spark turmoil. Cormac Marum, a director of Grant Thornton, said: "The January sales could take place in December next year as people realise that the cost of some goods will rise after Christmas 2009."

British Retail Consortium director general Stephen Robertson said: "Shops will cope, but implementing a new VAT rate in just a week will be exceptionally difficult for customers and retailers at their busiest time of year. IT system changes, replacing shelf labels and stickering over prices on packs will be a mammoth and costly task.

"Staff will inevitably be diverted away from serving customers. Small retailers will find all this particularly difficult to accommodate."

The BRC points out that shops will have to go through another round of system changes when VAT goes back to its old rate.