A coalition of major retailers is expected to announce today that they will pass on the VAT cut to shoppers despite it being a “logistical nightmare”.

The group of high street retailers, including Marks & Spencer and Sir Philip Green’s Arcadia Group, met last night to negotiate how they will deal with reducing the price of hundreds of thousands of items.

The 2.5 percentage point cut in VAT announced in the PreBudget Report on Monday is due to be implemented this coming Monday and will remain in place until early 2010. Smaller companies and independent shopkeepers are expected to find it more difficult to pass on the cut because of the logistical problems in repricing stock.

Sir Stuart Rose, the chief executive of M&S, said: “This is going to be very complicated to execute so we’re looking at working with other retailers to pass these savings on in full to our customers as quickly as possible.

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“Are retailers committed to supporting this cut? Absolutely. Is it going to be a logistical nightmare? Yes.”

Sir Philip Green, whose retail empire includes Bhs, Miss Selfridge, Topshop, Dorothy Perkins and Evans, said: “We’re working as quickly as we can to implement something by Monday.” Tesco, Sainsbury and Asda have all confirmed that they will pass on the cuts.

For those companies and shopkeepers who lack sophisticated stock management systems, the switch to 15 per cent VAT is costlier in relative terms. The Federation of Small Businesses said that many small shops will be unable to pass on the cut because repricing the stock would be too costly.

Mary Broughton, who runs Dorwest Herbs, a family company that sells veterinary medicines, faces a £1,500 bill to reprint a price list that goes to 40,000 retail customers a year.

“Our customers will expect us to pass it on. We would have an awful lot of people ringing up to complain if we didn’t. But we won’t get any benefit.”

Other retailers used the cuts as a promotional tool. DSG International, the struggling owner of Currys and PC World, cut its prices, starting yesterday. Boden, the catalogue shop, launched a 17.5 per cent-off viral campaign, which more than offsets the entire VAT burden.

Analysts said that retailers, who have been hit by falling consumer confidence, may resist passing on the cuts immediately. The majority of Britain’s large retailers have all pledged to pass on the reduction in full, though many were unclear when they would do so.

Most households will not notice a cut immediately, as many items in a weekly grocery basket, including most foods and children’s clothes, are exempt from VAT. The reduction will take 53p off a £50 grocery shop, according to the accountancy firm Deloitte.

Stephen Robertson, the director-general of the British Retail Consort-ium, said: “Implementing a new VAT rate in just a week is a practical nightmare for customers and retailers at their busiest time of year.”

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