VAT problem - any advice please ??



The VAT rate to be used is based on the supply date or 'tax point'. There are exceptions but the general rule is that the tax point occurs on completion of supply or completion of a service.
Regardless of how your supplier calculates the tax point, it definitely couldn't have been before you ordered them. According to HMRC guidance as that would have been after the 18th November, the tax rate depends on the invoice date being pre/post 1st December. This is the first time I've ever known an invoice date to influence the tax rate, as opposed the tax point.
So, if the supply point is after 18th Nov, and the invoice date is on or after 01 Dec, it must be charged at the new rate.
See page 2 of <http://www.hmrc.gov.uk/pbr2008/vat-guide-sum.pdf>
If they do go for the new rate or old, I would tend to think that from a purely legal perspective, they quoted you an "Inc Vat" price, and could therefore hold you to it (and in doing so increase their actual take).
One little question to ask yourself, if VAT had gone up rather than down... how strongly would you have wanted to hold them to the inclusive price rather than the exclusive price to which you would clearly now prefer ;-)
Hth Someone
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It's entirely up to them. They quoted you a price with all taxes paid. The price might still be £2060 with all taxes paid.
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wrote:

A lot of companies have said they will not be passing on the reduction in VAT. Having spent the past week working on implementing the change on my main product lines, I can sympathise. I still have a few thousand prices to review for silly looking prices - a penny or two over a round pound value for example. The rate change has produced a huge amount of work for no practical advantage.
Colin Bignell
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nightjar <cpb@ wrote:

No, no, the tills will be ringing, the prospect of saving 1 in every 40 will have people flocking in spending their redundancy money.
I'm not changing any ticket prices. Our industry doesn't attract 17.5% VAT so it doesn't apply to us. That said I am expecting people to argue about it and where they do I will make the appropriate reduction at the till, just to keep the peace.
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A lot of people seem to be confused and think that prices will come down by 2.5%.
The saving of 2.5% VAT on 40 (inc VAT) is only 85p.
The prospect is one of saving 1 in every 47.
MBQ
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Man at B&Q wrote:

Of course, it will be a saving of 2.50 per 117.50 not 100.
I might just have a dish of pound coins on the counter with a sign 'please take one', like the local petrol station do with pennies.
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Yes, some very clever maths going on with the Government/Inland Revenue. They are presenting this as a drop of VAT by 2.5% when it is more like 2.13%.
You must always take the 'NET' price (without VAT) and multiply it by the new 15% You should NOT take the VAT inclusive price and simply chop 2.5% off. 100 x 17.5% = 117.50 100 x 15% = 115.00 ... a diference of 2.50
But if you take VAT inclusive price and chop 2.5% off you don't get the full 115.00, 100 x 17.5% = 117.50 - 2.5% = 114.56 and not 115.00. The actual 'drop' in VAT is more like 2.13% 100 x 17.5% = 117.50 - 2.13% = 114.99.
I would imagine that firms who advertise their prices EX VAT would benefit the most as they would only have to change the VAT rate. Firms like MachineMart advertise their products with both EX VAT and INC VAT prices, therefore you can still work out their prices from older catalogues by using EX VAT prices and just adding the new rate of VAT on. In the end, all companies who charge VAT are unpaid tax collectors, doing the Governments work for them and not receiving any financial compensation for having to re-adjust all their VAT INC prices. There again, that should not give any company any excuse NOT to pass on the difference to the customer, or would they agree to defrauding the Inland Revenue?? Dave
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were saying:

Umm, not quite. It _is_ a drop in VAT of 2.5%.
17.5% down to 15%.
Nobody ever said that was equivalent to a drop in a vat-inclusive price of 2.5%. 'course it isn't.
Trouble is, Joe Public is functionally innumerate, and just doesn't understand basic mathematics...

Indeed.
I thought Darling Alistair wanted to make it EASIER for us to get access to credit, not to chop 15% off the revolving interest free loan he gives us every quarter?
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Adrian wrote:

The tax 'rate' has dropped by 14.29% :-)
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On Mon, 1 Dec 2008 08:31:04 -0000, "nightjar".me.uk> wrote:

And a lot are, was in a shop yesterday that had a notice saying the VAT reduction would be applied as a discount at the till. This stikes me as the simple pragmatic approach rather that all the agro of changing VAT inclusive price labels and, as you say, checking for "silly" prices as a result.
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Unfortunately, that is not an option on a web site. However, if they apply the correct discount, I wonder how many people they will get complaining that they did not get 2.5% off?
Colin Bignell
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That's all assuming that people were aware of the price of particular goods/services BEFORE the drop in VAT. Dave
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If the reduction is applied as a discount at the till, as stated, they will have the previous price marked on the goods.
Colin Bignell
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nightjar <cpb@ wrote:

That's what Tesco did for 28/11-1/12: "All prices currently displayed on Tesco Direct include VAT at 17.5%. These prices will be automatically discounted at the checkout to be equivalent to the new 15% VAT prices. This means a discount of 2.13% on all items." http://www.tesco.com/vat /
Owain
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And then made a complete balls of their receipts by failing to properly identify items liable for VAT or the amount of VAT on them. "Oh you'll need to go to Customer Services to sort that out", (they didn't), most tiresome.
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On Mon, 1 Dec 2008 18:59:11 -0000, "nightjar".me.uk> wrote:

Only if the commerce package doesn't have the facilty for discounts, a rather poor package if it doesn't IMHO. OK it might need to be enabled but it should be there.

Quite a few I expect, thinking about the shop mentioned above I think they were going to knock 2.5% off...
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On Mon, 01 Dec 2008 23:06:55 +0000 (GMT), "Dave Liquorice"

There was a shop featured in Working Lunch today that were taking 3% off at the moment as their system wouldn't allow half percentages .
I also got an e-mail from a website that has no shop outlet where they are keeping their prices the same at the moment and adding up all the reductions that customers would have got and having a draw among all registered customers ( regardless if they have ever bought anyhting) for what it amounts to.
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Implimenting it would be trivial. However, I don't consider it to be an option because the essence of marketing with a web site is to keep it simple to use. Even offering customers too many choices can reduce sales. Expecting them to calculate what goods will cost after appling a discount would see them leaving in droves.
In any case, changing prices by a general notice is only permitted for 14 days from the date of a change of VAT, after which all goods must have their corrent price marked. That is, no doubt, useful in a shop, where a lot of stuff will need to be relabelled, but an ecommerce package can do it at a stroke - well almost - it takes about an hour to upload one of my sites after a revision that affects every page.
Colin Bignell
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wrote:

So you tell every one the prices have changed and now correct including 15% VAT but you get a discount at the till. That could be kept going indefinitely.
MBQ
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Well, the VAT note I received recently seems to say that 15% should be charged on all invoices raised on or after 1st December, irrespective of when the work was done or started *provided* that the work did not start more than 14 days before 1st of December.
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