According to reports, Homebase is the latest retailer exposed as not passing on the VAT discount to its customers.
Unlike garden centre chain Dobbies, who never introduced the discount, Homebase announced to customers in December that it would reduce products at the till and then scrapped the pledge at the start of January without shoppers' knowledge.

In a story published on Sunday by the News of the World, a Homebase insider revealed: "Just before Christmas we got an email telling us the discount would not be done away with.

"Homebase claimed to staff the difference is going towards other promotions and discount on kitchens. But they would have been discounted at this time of year anyway."

The story claimed a memo sent to shopfloor staff stated the discount in place within Homebase stores would be removed with effect from January 5. It added that 'the price displayed will be the price the customer pays'.

Although it is not compulsory for businesses to introduce chancellor Alistair Darling's VAT cut, it has been considered bad form by many for retailers not to pass the savings on to cash-strapped shoppers.

A spokesman for Homebase said: "We can confirm we acted swiftly to make adjustments to the VAT rate by initially applying an extra discount for customers at the till.

"We have now decided that the VAT adjustment will be applied through deeper and wider promotions which will also directly benefit our customers, while on certain categories, individual price points have now been adjusted and displayed in store.

"The cost and selling prices of the products we stock is constantly changing and is made up of a number of factors, including supplier cost prices, foreign exchange rates, shipping costs as well as the change in VAT, which we currently pay at the full rate of 15%.

"We believe that this approach, which is intended to be broadly revenue neutral, is common to the current marketplace and is the best way to help provide great value to customers."