"UK VAT increases" Topic

With the UK rate of VAT rising from 17.5% to 20% on 1 Jan, could any UK traders let us know how they are planning to deal with it – Price increases or absorbing it or something else?

I imagine that many UK traders don't break the +£70,000 turnover threshold where they have to be VAT registered.

Perry prices are going up as of the First of Feb. They don't actually say it is because of the VAT, though, rather citing "rising costs."

In answer to the original post – see news item from 19 Nov at vexillia.ltd.uk/news.html

Connard – many UK traders use goods and services from large businesses that are VAT registered so their cost base is going up. They get you either way.

--
Martin Stephenson
Vexillia: Wargames Miniatures & Accessories
vexillia.ltd.uk
gallery.vexillia.ltd.uk
pikeandplunder.vexillia.ltd.uk

Mantic prices are going up 1st Jan and they cite the VAT increase as part of it.

VAT does not actually go up until the 4th Jan. Some retailers like us are holding price increases off for a while as follows:
"Price Freeze – VAT is due to go to 20% on 4th January 2011. We will absorb this price increase for all retail orders placed before 1st February 2011."
Regards
Web Admin (not Colin)

We will absorb this price increase for all retail orders placed before 1st February 2011.

What will you do after 1 Feb?

I really appreciate the companies who don't charge VAT to overseas buyers.

I really appreciate the companies who don't charge VAT to overseas buyers.

No company should if the customer is outside the EU.

the companies that buy in metal , resin , plastic etc will all be hit by a 2.5% increase in their costs … expect lots of price rises in the new year …

It should only be a 2.1% rise in costs.

Old tax rate. Cost of goods £100, plus tax 17.5%, total cost £117.50 GBP

New tax rate. Cost of goods £100, plus tax 20%, total cost £120.00 GBP

A rise of 2.1%

But most people can't do simple arithmetic so expect most prices to go up by 2.5%

I have got in stock that should see me avoiding any more price rises until the postal increases in April. I'll just have to see how big those are before I decide what to do.

As to no VAT on non-EU orders, only true if you are VAT registered, and I'm not.

I run a small buisness (not vat registered) but all my costs will be going up fuel/stock/ printing supplies + postage rates in April.. so prices will rise (you cant keep on absorbing these costs) on some items Iam selling stuff for less than 10 years ago! ,but inflation keeps on going up

As to no VAT on non-EU orders, only true if you are VAT registered, and I'm not.

But if that is the case then there is no VAT on ANY of your orders, whether in the EU or not!!

If you read what you said carefully it says that you are not VAT registered so you will charge VAT on non-EU orders!

Gzg and Prince August deduct it.

Baccus have a VAT system in their cart too.

"But most people can't do simple arithmetic so expect most prices to go up by 2.5%"

Or if they are REALLY bad at maths 25%…. ;P

Fighting 15s also deducts VAT in the shopping cart for non-EU customers as well as EU customers in tax havens such as the Canaries :-)

Ian

No Margard – I meant that I can't deduct VAT from non-EU orders because I'm not VAT registered.

Of course there is VAT on my sales, just not collected by me or paid to HMRC by me. I paid it to all my suppliers and can't reclaim it.

My comment was to be read in the context of an earlier post – I'd have thought that was pretty obvious.

Connard – many UK traders use goods and services from large businesses that are VAT registered so their cost base is going up. They get you either way.

Yep, seconded.

Plus fuel costs a lot more and postage costs going up (by about 10%).

So lots of costs increasing.

Fuel oil the increase is about 40%!.

My comment was to be read in the context of an earlier post – I'd have thought that was pretty obvious.

No, sorry, it wasn't.

Margand

Apology accepted, we can't all be giving a discussion our full attention.

I do know a couple of traders who reduce their overseas postal rates by the requisite amount to simplify things for their online shopping cart and to save having to list VAT-free prices on the website. So while it might not appear that VAT is being decuted for non-EU customers, it might be dedcuted indirectly by having a correspondingly low postal rate. I'm not defending this policy, just pointing out that this definitely happens/happened in some cases (though this might have ceased now that online shopping carts have become more sophisticated).

I do know a couple of traders who reduce their overseas postal rates by the requisite amount to simplify things for their online shopping cart and to save having to list VAT-free prices on the website.

It's a practice that continually produces whinges from overseas customers who do not understand why tax is not being removed. No amount of explanation helps make it clear that they are not being rooked: they simply see that tax is not being removed, and complain away on that basis.

Maybe someone with good writing skills can write a brief explanation on how it works for Bill and he can post it as news for all to see and digest.

It won't do any good – some people just refuse to understand or accept the system as it has been described on a number of discussions.

Some people seem to want to believe they are being cheated and won't accept that they are not in most cases.

It is a hobby, everything should be free :)

LOL @ Sector51.

Yes that does come up every now and then…

Hey Sector51 why don't you run for PM I think you'd have a runaway majority, yours is the best policy I have ever heard.

"It's a practice that continually produces whinges from overseas customers who do not understand why tax is not being removed. No amount of explanation helps make it clear that they are not being rooked: they simply see that tax is not being removed, and complain away on that basis."

That's why Companies should consider putting Dollar (etc) prices on their products = no VAT(like Foundry do – even though I'll bet they do claim VAT back on non-EU exports) & that's also partly the reason why their prices bear no relation to the current exchange rates.

A recent report suggested that many UK companies were going to use the VAT increase as a screen to generally increase their prices (i.e. by more than 2.5%). And let's not forget quite a few companies didn't bother to drop prices when VAT was set at 15%.

Luke Warm wrote:

A recent report suggested that many UK companies were going to use the VAT increase as a screen to generally increase their prices (i.e. by more than 2.5%).

See my post above for an explanation of why the actual rise should be 2.1% not 2.5%

not just in wargames, but lots of retailers already increased the prices in the autmn, then offered incentives for xmas, and in Jan will promote their goods as "we pay the vat increase".

ipod classic, for example, was £165.00 GBP in summer, now listed at £200.00 GBP with £25.00 GBP off for xmas……..

Luke Warm- How do companies claim back Vat on things that are not eligible for Vat in the first place?

Unfortunately we will be increasing prices on the 4th January. This will be due to both the increase in VAT and an increase in pricing due to increased costs.
We also have a system that deducts VAT at the checkout for Non-EU customers.

Erik
Figures In Comfort

Derek H wrote "See my post above for an explanation of why the actual rise should be 2.1% not 2.5%"

I don't think you quite grasped what I was getting at – you'll do well to find any Company bothering about a petty 0.4% – many are going to raise prices by 5% and more. Plus it'll cost companies to administer/action the VAT rise.

Mickthemagpie – if you're a VAT registered UK company it's so, so easy. The buyer is lead to believe that they've not paid VAT but actually they have ……
e.g.
You sell overseas at an advertised $US price (that's what the customer sees) but when you fill out your VAT returns your $ sales will be converted into £'s and will state that any saling price would have included VAT which you can then claim back because they've been exported outside the EU.

For that matter I haven't come across any US companies offering to refund sales tax …..

Um, you don't pay Sales Tax to US Companies if you live in the UK or Europe. Ever. Only if you live in the same State as the US Company.

Thanks,

John

Luke Warm

Most companies use accounting software that automatically works out VAT. Mine, and i would assume others are the same, works it out based on the destination country rather than the currency used which doesn't come into the equation at all. I'm fairly sure any company claiming VAT back on non VAT transactions would be breaking the law. I would also imagine it would be quite easy for the authorities to spot- they're pretty good at that sort of thing you know!

Regarding the general issue of increasing prices in line with the % increase in VAT I think people are forgetting that many costs of producing goods and services do not attract VAT, principally salaries and of course, profit. A genuine VAT only increase in prices should be considerably less than the headline rate. We all know who the genuine companies are and we all know the ones that will jump on any excuse to increase prices disproportionately . If wargamers stopped spending their hard earned cash with the latter then they would be forced to change their ways or go out of business.

Whatever you say Mick – however I know (100% certain) of least 4 companies in the hobby that do get a rebate on VAT for items exported outside the EU.

Luke, you don't seem to have a clue what VAT is, what it is paid on or how it is claimed back.

A company that is VAT-registered may claim back the VAT on goods that they have BOUGHT as essential business costs.

Thus your claim that a company can claim the VAT back for goods that they have sold is meaningless gibberish.

When an item is sold, the proportion of that item that is charged to the customer as VAT must be declared and paid to the taxman. There is nothing that may be claimed back – only by the person doing the buying.

R Mark, I think what Luke means is that the VAT amount is passed back from the buyer to the original business entity..So if I sold model tanks in a shop I would charge VAT to my customers which would then be passed back to the wholesaler which then gets passed back to the manufacturer…IE there is a trail of VAT from the original source to the poor customer who is the one that actually pays it!!

Ta Archstanton73 … that is more or less what I meant.

And R Mark as your such a clever dick ….I've filled out more VAT returns than I care to mention and never had a problem with the VAT man ()and we've been audited in the past) and I received a VAT rebate on goods exported outside the EU – perhaps if you understood how VAT on goods exported outside the EU works you wouldn't come out with such twaddle yourself -

VAT fight! I find they are the most exciting of all.

LOL – VAT forms at 10 paces

So if I sold model tanks in a shop I would charge VAT to my customers which would then be passed back to the wholesaler which then gets passed back to the manufacturer…IE there is a trail of VAT from the original source to the poor customer who is the one that actually pays it!!

Nope, not that either.

VAT is strictly between the government and the seller. So you collect the VAT and give it to the government, no one else.

You can claim VAT back on your purchases, again from the government, no one else.

Businesses are acting as tax collectors, which saves the government money.

If you buy an item from within the EU that is eligible for VAT then you can offset the VAT against receipts you receive that are subject to VAT. If that item is then sold within the EU VAT will be included and can be offset against VAT paid on purchases. If, on the other hand, that item is exported to a non EU country it is not subject to VAT so there is nothing to claim back.

sector 51 is quite correct we are unpaid Government tax collectors ;-(

Fact – My Company has received a VAT rebate on goods sold outside the EU for over 10 years!!!!!!!!!!!!!!!!!!!!!

So Mick – lets try to explain very, very simply.

As a Retailer you have 2 options when selling outside the EU
You can charge the "standard price" which includes VAT OR you can charge a price that already has the VAT removed (like nice Front Rank & Fighting 15's do).

If the end customer has paid the price that included VAT then you can claim this back because the Government is only entitled to the VAT paid on goods sold within the EU – you were sort of getting to it in you "that item is exported to a non EU country it is not subject to VAT" – you the seller can claim this back.

It's a bit like if I'm traveling back to the States so long as I get VAT receipts for any goods I purchase in the UK which I'm taking back to the US I can go to a desk at the airport and providing I'm willing to fill out the forms I will receive a refund on the VAT paid – because although I purchased the good in the EU and have therefore paid VAT I've now become the exporter and am not liable for the VAT = refund (even though the last seller has collected it).

Its all irrelevant re sale prices.

Firms will and should charge what the market will bear. Price has nothing to do with costs, just what people will spend.

Just 'cos a trader is not VAT registered he doesnt sell products in the UK at a lower price than those who are.

He does pay VAT on what he buys in, whether he can recover it or not.

But everyone gets paid from that 30p you spend on a wargames figure – retailer, manufacturer, government, raw materials supplier, haulage company, electricity company, office cleaners and copier salesmen. Thats a mighty hard working 30p!

And yes, US firms do often try to add VAT to UK sales as a "bonus" mark up, even though they arent VAT registered. Ive had quite a few software downloads where they have done exactly that.

Lukewarm: you are assuming that the trader is VAT registered and that you have a VAT reg no on your receipts. Not all wargames businesses are making enough turnover to require registration, and if you are providing a high service element (rather than selling bought in stock ( e.g a figure painting business) you might not find it worth while to register for VAT voluntarily. No VAT reg no, no claim.