Posts Tagged ‘Pre Budget 2008’

One of the common objections to subscription based software-as-a-service is the ongoing, albeit low, cost. Whereas traditional desktop based software is supposedly a one-off cost.

We have a page next to our pricing to attempt to explode this myth, but it’s still something that comes up again and again.

As if to prove my point, this month Sage have written to their customers in an attempt to force them to upgrade and/or buy support if they want their software to continue to work.

When the Chancellor announced the change in the VAT rate from 17.5% to 15% KashFlow and all the other web-based accounting software vendors got any required changes made to the software within 24 hours. No disruption or cost to the customer.

Sage however have seen it as an opportunity to squeeze more money out of the already cash-strapped small businesses that are affected. They have released a “VAT Change Utility Tool” that you have to use in order to “reconcile your VAT when the 15% and 17.5% rates both apply within the same VAT return.”

Their letter continues:

What do I need to do?
We’re offering Sage Instant Accounts VAT Change Utility Tool as part of the SageCover and SageCover Extra contracts. Due to your Sage Instant Accounts software being below v14 you will need to upgrade your software.

Sage seem to know they’re squeezing their remaining SME customers dry so they’re offering credit to help you pay for it all.

Way to go, Sage.

I’ve seen announcements from a  few other accounting software companies this morning about how they’ve upgraded their systems to deal with the new VAT rate as from Monday. All very odd. We’ve not had to change a thing in KashFlow to support it – I guess that’s just a sign of how flexible it is. The only thing we will be doing is changing all accounts with a default rate of 17.5% to have a default rate of 15% as from Monday morning.

The big thing that other vendors seem to be overlooking is the Flat Rate Scheme. If you’re VAT reporting period has this change of rate in the middle of it then you have to essentially do two reports – one on the old rate and another on the new.

Needless to say, we have added something to KashFlow to deal with this as detailed in our Change Log page.

I’m sure this will become a big issue for users of other software once the smoke clears.

So it’s been confirmed – for a year from next Monday, the standard rate of VAT will be reduced to 15% instead of 17.5%.

I’m still not sure how this is meant to help the man on the street. The only benefit from this is going to be to companies at the end of the VAT chain. That is, those that are registered for VAT but sell mainly to non VAT registered companies or individuals (ie, “the man on the street”)

Argos aren’t going to re-print their catalogue. So a digital camera is still going to cost £50. The only difference is that HMRC will only get £6.38 of the money instead of £7.45, the difference is profit for Argos