The cost of changing VAT

[syniqal]

The last week has been an experience I would prefer not to repeat. On Monday, 24th November, 2008, Her Majesty’s Treasury announced a 2.5% reduction in VAT to enter into effect on Monday, 1st December, 2008, for a period of thirteen months. Implementing this change in a well-designed computer system is fairly simple: Alter a setting in one or two

Comments

[ian_wyrdness]

I still say that you can't blame the government. If you company had written its software correctly in the first place, you wouldn't have this problem. Blame the managers who didn't write the spec properly, the developers who wrote the code and, perhaps, the testers who didn't run a test with a different VAT rate.

[syniqal]

I can't blame the Government for my predecessor's code - that is his fault only.

I can blame the Government for not considering that systems like this will exist across the country, and they are quite common, and that businesses with systems like this will have an absolute nightmare implementing the VAT rate change on such short notice.

[lordofmisrule]

I agree. Doing so in such a short space of time is clearly an attempt to sway the voters. It was a bad idea but it's kinda self inflicted on companies who hired morons or who didn't have adequate change processes in place.

[peppapig]

We aren't sure what to charge any more... if we bought something and held it in stock then we probably will need to apply 17.5% to devices. We only apply about 13% to pharmaceuticals. Sometimes. Although - to be fair I doubt we will lose any money, because DoH might need to give it back again. The answer will be interesting and since we only invoice for that kind of thing in retrospect and all sorted out manually, we should be OK.

[m31andy]

Any non-standard rate goods will not change (AFAIK) as it's only the standard rate of VAT that's being altered. I know cuvalwen is having a crash-course in VAT points at the moment (whether you charge VAT from the goods being received or from the invoice being received - it depends, basically) so it does sound like a complete nightmare for smaller companies.

[kelemvor]

Some non-standard items will need their VAT codes changed. My employers sells a number of packages of alcoholic beverages and cheese in various combinations. The VAT rate applied depends on how much of the consumer unit is cheese and how much is alcohol. Thankfully, this is rounded to the nearest 0.5%, but it's still a pain each year to get the right code applied to the right product. Now, those calculations need to be done AGAIN.
I'm going to run a query soon to check that the VAT codes on such items have been amended - this could (politically) drop me in the nasty stuff at work.

[cuvalwen]

And when you say 'crash' course, it's refering to the sound of my head hitting the desk....
It's being a pain. Particularly since after the 14th we'll have invoices with two tax rates being applied.

[tallanvor]

Sorry man, but it's not the government's fault that your system (or anyone elses) was not designed properly. Big businesses won't be affected much because properly designed systems can accept different sales taxes easily.

It sucks for you to have to make the change, and I sympathize with the regards to the amount of work you have, but I don't feel bad for your company - they never should have paid someone to perform such crappy work.

[syniqal]

It's not the Government's fault that the system is badly designed; it's the Government's fault that we only got five days' notice.

[adelpha]

As this is something intended to increase spending, a long wait would have had the opposite effect - people stop spending and wait until the rate change.

I wonder how many of the badly designed apps were done that way intentionally. Nothing like being called back to make changes to something that was originally an assumption in the spec. Even better if the client signed off on it ;)

[tallanvor]

Exactly. Even if they had made the decrease take effect on Jan 1, a lot of people would have held off purchases and hurt a lot of retailers.

I doubt, however, that many of the applications were purposely designed to be hard to change. It's more likely the programmer just never thought that VAT might change. This sort of problem is less common in the States (but by no means nonexistent) because tax rates vary by state, and often local communities have their own special taxes as well, so you have to consider how taxes can vary from community to community when building software.

[roguesolo]

I know this may be a little too late but...

Have you considered having each sales order raised after 01 December to include an additional sales item?

Namely "VAT discount -2.5%."

The sales order total then has this discount applied. It might be a bit easier than changing 200,000 instances of hardcoded 17.5%.

[syniqal]

Hmm... That may have worked, but it wouldn't have solved the problem we had with 17.5% being displayed all over the site.

It's all sorted now, thanks to some really quite nasty broad hacks in the code. :/

[roguesolo]

Am glad to hear that you've managed to sort it out.

You have my sympathies in regard to bad programming. Been there, seen that. It hurts.

How long do you think it will it take you to implement a lookup table with all the relevant VAT rates?

[syniqal]

Well, if we were doing it properly, we'd have a table with VAT codes and validity dates so that it goes in and looks for a VAT rate for the given code for the given time period so that we can easily look up what is sold at what rate (I don't think we have many exceptions to the VAT rules, if any), but that would take a couple of weeks at least (Good thing about this change is that I now have a number of patch files which I can quickly modify to patch the entire system with better code), and I handed in my notice two weeks ago with my last day being Friday, 2nd January, 2009. :)

So, basically, when it comes to this particular crappy system, I couldn't care less. ;)