Serious question re VAT

[withdeanwombat]

Now,we all know that VAT has reduced by 2.5%.I have an order in(1/3rd deposit paid) on an item which cannot now be delivered pre christmas as arranged.

I've asked to have the 2.5% deducted from the total as the firm is collecting tax that the govt.will not collect,and this LOOKS like the money will be going into the firm's profit column.

Can they do that? Should I just cancel and get the deposit returned?Should I firebomb the shop?

Really,is it legal to take tax that won't be collected?

 

[clippedgull]

Was the order placed before VAT was reduced?

How much are we talking about?

 

[Bluejuice]

No retailer HAS to pass the saving down on to you or I, the customer, so legally there is no grounding.

I would just kick up a stink and if they refuse take your business elsewhere

 

[Knightsworld]

From what i can make out is:

Say your item was £ 1,000 includes VAT of £ 148.94 (17.5%)

You paid a deposit of £ 300 includes VAT of £ 44.68 (17.5%) pre Dec 1st.

So your outstanding balance due is £ 700 includes VAT of £ 104.26 (17.5%)

So the net what the store is due is £ 595.74

So they should then invoice you £ 595.74 x 15% Vat 89.36 = 685.10

This is what i was told yesterday, whether it is right or not i don't know, but seeing as it came from an accountant, i would hope it is!!

 

[Gritt23]

You presumably bought the item at the ticket price, regardless of how much of that price was made up of vat, therefore the retailer is entitled to continue to charge you that price.

Let's say it's a £2,000 suite. You have bought that for the advertised price of £2,000, which includes VAT, so regardless of the VAT change you still have to pay £2,000.

If however, you had bought it for an advertised "£1,702.13 (excl VAT)" then the retailer would have to apply just 15% Vat, meaning you'd pay £1,957.45.

As had already been said, this reduction doesn't have to be passed on. For example, I bet any NCP car park that is charging say £1 per hour, hasn't suddenly charged 98p per hour, or tagged on an extra minute to your allowed stay for the hour.

This 2.5% VAT reduction is one of the most stupid, pointless wastes of time that I've known a Chancellor come up with.

 

[Wardy]

No retailer HAS to pass the saving down on to you or I, the customer, so legally there is no grounding.

I would just kick up a stink and if they refuse take your business elsewhere

No but they do have to issue you with a receipt that shows the cost of the item with VAT seperated. In this situation the item was ordered when VAT was at 17.5%. Since it is now 15% the bill will need to reflect this. So if they are not going to pass on the reduction in VAT they are in fact charging more for the item. This would be a change in contract.

 

[sten_super]

From what i can make out is:

Say your item was £ 1,000 includes VAT of £ 148.94 (17.5%)

You paid a deposit of £ 300 includes VAT of £ 44.68 (17.5%) pre Dec 1st.

So your outstanding balance due is £ 700 includes VAT of £ 104.26 (17.5%)

So the net what the store is due is £ 595.74

So they should then invoice you £ 595.74 x 15% Vat 89.36 = 685.10

This is what i was told yesterday, whether it is right or not i don't know, but seeing as it came from an accountant, i would hope it is!!

But VAT is (as the name suggests) tax on the value added to a product. So if the firm bought the product from a producer for £800, and sold it to you for £1000, they would have to pay 15% * (1000-800) = £30 in VAT. Their direct saving from the cut in VAT is £5. They could (quite justifiably) argue that when they bought the product they bought it (pre Dec 1) at a price which included VAT at 17.5%, so the only VAT saving that has been made is the £5 earlier.

 

[Pavilionaire]

Further evidence that the Chancellor and New Labour are helping small businesses?

Increasing Sales? No
Increasing red tape? f*** yeah!

 

[Adam Virgo's Shirt]

Was the order with MFI?

 

[Acker79]

I get a money advice email each week, one came today and it had this in it:

VAT cut . Get £££ back on purchases big and small. On Monday the VAT rate changed from 17.5% to 15%. Here’s a quick Q&A (thanks to JW at PriceWaterhouseCoopers for help).

Do shops have to cut prices? No. If they keep them at old levels, it’s a price rise, as effectively they’re increasing the pre-VAT price. Yet with the cost of price list changes & the poor retail climate it's likely. After all, dropping a £9.99 DVD to £9.78 looks weird. Many passing the cut on are more likely to leave some goods, and cut others by more than the difference.


It’s a 2.1% not 2.5% price cut. Imagine an item at £100 before VAT. Add the tax and it now costs £115, where it used to cost £117.50. This means you save £2.50 per £117.50 (not per £100) a cut of 2.13%.


Refund on goods ordered but not delivered? VAT is charged at “time of supply”. So if you put a £100 deposit on a £5,000 kitchen, under new rules you should only pay a further £4,793 when settling the balance. The key's in the agreement, if it just said ‘VAT inclusive’, it can choose whether to pass the cut on. If it said ‘£XX plus 17.5% VAT’ or ‘VAT at the appropriate rate’, you may have a legal argument that it has to.


Refund on goods paid in advance? If you paid up front for a monthly subscription, eg, a gym, this falls under ‘continuous supply of services’ and it doesn’t have to change the price. Though BT is going to give refunds to all customers (it doesn’t have to).

Money Saving Expert: Consumer Revenge - Credit Cards, Shopping, Bank Charges, Cheap Flights and more

 

[Djmiles]

We ordered a car in early November (£1000 deposit), to be collected next week.

Rung up Ford to see if we would get the VAT off, and they said yes!

 

[Tom Bombadil]

The simple answer is no they don't have to refund you the difference. It's all to do with tax-points darlings. If you want a longer explanation then you are an accountant.

 

[Skint Gull]

They don't have to give you a refund but as someone else said, check if the receipt says vat at 17.5% or 15%. All of my customers who paid deposits before December but will have their products fitted after will get the cut because I don't want the hassle of trying to keep it and i'm certainly not gonna let the government have it.

As I said on the thread at the time, quite probably the stupidest idea ever invented to reduce VAT. The problems this causes so many business' is quite incredible for something which will NOT increase sales. Useless TWATS

 

[Kenhead]

I noticed that Expo are donating the difference to Mcmillan trust, o2 are going to give me an extra 22p for every £10 i top up and the seagull shop are doing discount days so i suppose it does depend on the company but it more customer friendly with the discount added.
I'm more likely to top up more often even though its only 22p as it doesn't fill like they not trying to fleece me out of extra money.

 

[Nottseagull]

This 2.5% VAT reduction is one of the most stupid, pointless wastes of time that I've known a Chancellor come up with.

The point of the reduction was to keep more money in the economy; whether or not the saving is passed on, that objective has still been achieved.

 

[seagullsovergrimsby]

The 2.5% VAT reduction is a joke as basically retailers can ignore it if they quote their prices as VAT inclusive. You can only get a refund on a deposit/purchase ordered prior to Dec 1st but then paid/delivered after this date if the invoice or receipt shows the VAT element separately at 17.5%. The major supermarkets have all applied the new VAT rate on applicable stock lines but as usual in the run up to Christmas put up prices on fruit & veg and basic foodstuffs so your shopping bill will creep up unless you buy lots of DVDs CDs electrical items and adult clothes.

 

[O Lads]

If an order is placed before the VAT cut, you'll have to pay the 17.5% regardless of when it is paid.

 

[Djmiles]

If an order is placed before the VAT cut, you'll have to pay the 17.5% regardless of when it is paid.

Incorrect, we placed our order for a new car 2 months ago and the VAT cut is being honoured.

 

[skipper734]

The Tax point is the date on the invoice/bill. QED

 

[Seagull Stew]

But VAT is (as the name suggests) tax on the value added to a product. So if the firm bought the product from a producer for £800, and sold it to you for £1000, they would have to pay 15% * (1000-800) = £30 in VAT. Their direct saving from the cut in VAT is £5. They could (quite justifiably) argue that when they bought the product they bought it (pre Dec 1) at a price which included VAT at 17.5%, so the only VAT saving that has been made is the £5 earlier.

Surely a firm would have to pay tax at 15% of £1000 and reclaim at 17.5% of £800.
How much a frim would reduce prices by would depend on laws of supply and demand, competition and price elasticity of said product. Maybe an economist can confirm this.
Firms might also agree to subtract the 2.5% for the sake of customer relations but I would imagine that there is no legal obligation for them to do so unless they've quoted an amount plus VAT.