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VAT Rise is Set to Damage IT Budgets

The latest budget revealed by the new Chancellor of the Exchequer earlier this week, has left experts fearful that as VAT rises, IT departments will suffer at a time when budgets are already tight.

IT risk and assurance partner at Ernst and Young, Richard Brown said: "Many CIOs have had to operate with reducing or flat budgets during the downturn. During that period the need to invest in IT has not gone away and in many instances has become more mission critical.

"There is now a growing backlog of spend across many parts of the IT estate, such as hardware refresh, implementing and licensing new and existing technologies, hiring contractors for skills gaps and new technical skills and purchasing third party service provision, which will need to be incurred. The VAT rise has just made that a little more expensive."

Although Brown says that a lot of IT departments will not be affected by the budget changes he has warned that the announcement will effect IT departments in organisations involved in financial services, health, welfare, housing, charities and central government.

Brown stated: "As they are unable to recover the VAT incurred on expenditure, there is therefore an increase in the overall cost."

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