VAT reductions

[twirlgirl]

my daughter ordered a wedding dress in august 2008 and paid half the cost then the dress arrived in the shop just before xmas, we wnt yesterday to see it and were asked to pay the remaining money, i noticed that there was no reduction on the vat, is this because it was ordered before the cuts came in or ae there no reductions on sucj items, thanks for any advice

[CheekyChops]

I don't think that there are any rules stating that retailers must pass on the savings in VAT to shoppers. Obviously most of them have done (not the shop I work in, lol) but they don't have to.

[twirlgirl]

thanks cheekychops

[carrot99]

check again twirlgirl just to be sure.

Shops don't pay VAT as far as I understand, it's customers who pay.

In August you were charged 17.5% on your invoice and made a part payment so I presume you should therefore, pay 17.5% on the out-standing amount as well.

CheekyChops your employer adds the VAT to the price of the goods you sell - so he should be deducting 17.5% and adding 15% now. It isn't a saving and it won't make any difference to the price your employer pays for stock, it's just a tax he has to add on to whatever price he charges your customers.

[twirlgirl]

thanks carrot99, we are now about to order bridesmaids dresses veil etc and I wonder if we will be offered a reduction but as far as i understand they do not have to do so , is this as you would see it, thanks again

[carrot99]

twirlgirl - if you buy something now that has VAT added, it has to be added at 15% as this is the current rate.

Its not a saving or a reduction - it's just less tax being added to the cost charged by the shop.
So last August if the shop wanted �100 for a dress they charged you �117.50 - the �17.50 or 17.5% tax going to the government. Now the government only want 15% so the shop will want �115 - �100 for them and 15% tax to go to the govenment.

It's not a reduction just less tax added on after the shop decides what it wants to make.

[twirlgirl]

thanks for your patience, I actually was told the price of the bridesmaids dresses veil etc before the government reduced the VAT sojust wondered if they should now offer the goods at a lesser price

[carrot99]

yes - it's at the time of the purchase that the current rate of VAT is used. So now it will be the original price plus 15% if it said �x plus VAT or if the price included VAT take off 17.5% and add 15% .

e.g. �2000 divide by 117.5 multiply by 100 to remove 17.5% VAT to get shop's price of �1702.13 then
to add 15% back on
�1702.13 divided by 100 and then multiplied by 115 so new total price = �1957.45
hope that makes sense to you.

[mont6660]

Is it not something like 2.13% that they take off the total inc VAT price to allow for the drop to 15% VAT - I think!!!!

[twirlgirl]

thank you very much for your help, i understand now

[Skyline D]

The important thing for vat purposes is the "point of sale". For the wedding dress that was August 2008 and so, technically, it would be correct to charge 17.5% on the balancing payment received now. You were effectively invoiced last August even if you didn't actually receive a bill.

If you now order bridesmaids dresses then the tax point is now and VAT would be chargeable at 15%. So yes, in theory if you were quoted a price before it should now be lower. There's nothing in law that means the shop is obliged to offer a cheaper quote now though. Pricing is discretionary. They can charge what they like. They don't have to pass the vat saving on and they could easily claim prices have simply gone up since the quote was issued.

[Im a BusyBee]

If a bridesmaids dress was say �117.50 including VAT before, today it should be �115.00 including VAT. If the shop still charges �117.50 it will be keeping the "over charge" (if you like to call it that) as they will only have to hand over �15 VAT therefore making an extra �2.50 profit for themselves.

[twirlgirl]

thank you so much for your time and expertise, I now understand the situation and will see what will happen when we go back to the shop

[Skyline D]

Slightly pedantic of me busybee but that's not exactly correct. If the shop still charges �117.50 as in your example the VAT inclusive @15% is actually �15.33 so the shop's "take" is �102.17 instead of �100.

They would have kept the extra �2.17, not �2.50.