"Hidden VAT Charges For Delivery?" Topic

Have VAT rules changed recently? I've just discovered this issue that I've never noticed before:

I live in the UK and I've just received an order from a UK company that will remain nameless. The total cost of the figures was £12.50. The small-print confirmed that this price includes 20% VAT. Delivery charge was £2.73. So far so good – no complaints so far.

However, the invoice then shows VAT levied at 20% of the TOTAL cost (goods plus delivery charge), which adds another £3.05 GBP to the bill, making the final cost £18.28 GBP and meaning that I'm paying VAT more than twice (in fact I'm paying VAT on the first lot of VAT)!

Naturally I thought that there must be some mistake – the flippin' computer system is mistakenly set to add VAT, even though it's already included in the price.

However, upon investigation, the small-print does say that companies are required to charge VAT for delivery on the total cost of the package, including the P&P costs!

Since when??!!

I've never come across this 'double' VAT charge before. Is this correct? Is this common practice? This was certainly something that we never charged in the company I used to help out with – VAT was included in the figure price and that was it. (Overseas customers would then get a pro-rata reduction in their P&P rate to compensate for VAT being included in the figure price)

So have any other TMPers come across this practice and does anyone know if it's correct?

However, the invoice then shows VAT levied at 20% of the TOTAL cost (goods plus delivery charge), which adds another £3.05 GBP GBP to the bill, making the final cost £18.28 GBP GBP and meaning that I'm paying VAT more than twice (in fact I'm paying VAT on the first lot of VAT)!

That doesn't sound right at all. In fact I'd say it was illegal. You should not have to pay VAT twice.
link

That's what I'm thinking. It's not something I've noticed before, though it's always possible that I may simply have not noticed. It may also be something that companies area MEANT to charge, but often don't? As mentioned, the terms and conditions page does declare this to be the case, but it still seems very wrong.

As it happens, these are already among the most expensive figures in the market, but this extra charge makes them just over £3.00 GBP per figure!

I have put some other, much larger orders in with them recently, so I'll dig out the invoices to check what was charged then.

I have a good relationship with the company in question, so I'm not going to publicly name names, as I'm willing to give them the benefit of the doubt. I have e-mailed them, so I'll be interested to see what they say.

Thanks for the link. It seems to me that they should simply be charging VAT on the cost of delivery – i.e. the £2.73 GBP and not the whole package.

The T&Cs page includes the following information:

VAT

…Prices of miniature figures and models in the shop include VAT at 20%. Books, including wargames rules, are zero-rated for VAT.

SINGLE FIGURES

…Our current guide prices for 28mm ********* single figures …are £2.50 GBP foot, £5.00 GBP mounted, including VAT but excluding delivery.

POSTAGE, PACKING AND DELIVERY COSTS

The shopping cart calculates the appropriate postage according to the total weight of an order.

…VAT is added to these prices at a rate of 20%. Although postage is exempt from VAT, companies must levy VAT on delivery charges according to the VAT rate of the contents.

There are no other charges.

The order was clearly placed at Fighting 15s as lifting parts of my Ts&Cs will reveal from a search.

Mark has wrongly assumed that £12.50 GBP is the VAT-inclusive sub-total – it is the ex-VAT sub-total – as he could work out from the fact that he ordered six figures at £2.50 GBP each including VAT (or £15.00 GBP inc VAT, equalling £12.50 GBP ex VAT plus £2.50 GBP VAT).

He has then been charged VAT on the £2.73 GBP delivery charge, equating to 55p of VAT, and £3.05 GBP of VAT in total.

So his order is £12.50 GBP ex VAT of figures, £2.73 GBP of delivery ex-VAT, plus £3.05 GBP of VAT. He has been charged VAT once, fairly, at the correct rate, and his only sin is not to take it up with me first before posting on TMP.

Ian

If postage is exempt from VAT, how is there a VAT liability on "delivery charge"?

Hi Ian,

My sincere apologies. I had absolutely no desire to give any indication as to which company I was talking about, as I hope I made clear, but thanks for clarifying. As you say, it was my mistake – 6x £2.50 GBP = £15.00, not £12.50. It was the sub-total of £12.50 GBP that confused me.

I have e-mailed you, but it's still sitting in the outbox waiting for work's server to allow it to go out, so I'll delete that now.

Nothing to see here apart from a maths-dunce…

Rob,

It's explained at the link given by Margard above.

Mark

I'd have gone for a direct email with Ian rather than ask for the general public to explain it. I've been buying off Ian for quite a while though and he's deffo in the top ten of trustable traders, but regardless good to see it sorted. Hope we're all chums again. :-)

I hope so too! As I said, I had no intention to name names (I thought I'd been discreet!), as a. He's a good egg and b. I wanted to know if it was something legit I was unaware of. In the end it was c. My mistake :o)

It seems to be increasingly common for gamers to complain on TMP about a problem (real or not) before contacting the supplier/compant first. Would you do this if you had a problem with your local supermarket or car dealer? Probably not. So why run down a company on TMP before you have discussed the problem with them first?

While not defending poor services or products, most problems can be resolved with a quick phone call or e-mail to the company concerned. It takes a long time to build a reputation for a small company and a few hasty or thoughtless comments can cause a lot of damage.

BTW we had a customer do something similar last week – a quick phone call or e-mail to us first would have resolved his problem (which, incidentally, was not our fault) straight away.

Barrie
TimeCast

If postage is exempt from VAT, how is there a VAT liability on "delivery charge"?

For businesses, when they charge postage it becomes a "Service" and services are subject to VAT.

That doesn't sound right at all. In fact I'd say it was illegal.

As a wise man once said: Google helps impart Information, not Knowledge. Confuse the two at your peril.

While not defending poor services or products, most problems can be resolved with a quick phone call or e-mail to the company concerned. It takes a long time to build a reputation for a small company and a few hasty or thoughtless comments can cause a lot of damage.

Curse of the modern work environment perhaps: your company will take it harshly if you use their phone for private issues, but they'll never find out about you using the internet to do the same? So it's easier to post to a forum than pick up the phone…?

D

antenocitisworkshop.com
governanceoftechnology.com

I don't think RMD is at all at fault here. He asked a general question sparked off by a particular instance. He kept the name of the supplier out of it and I for one had no idea to whom he was referring until the supplier went public.

He didn't know if there was a problem or not and wanted a steer from a (knowledgeable?) group who no doubt encounter similar problems, or know the answer.

This is not the same as running off to air a grievance publicly without contacting the supplier first and is certainly not destroying anyone's hard won reputation.

I agree that people with grievances (real or imagined) should pursue them in first instance with the supplier but finding out first whether something is normal/required practice seems entirely reasonable.

That doesn't sound right at all. In fact I'd say it was illegal.

As a wise man once said: Google helps impart Information, not Knowledge. Confuse the two at your peril.

However, further investigation showed that VAT had not been separately charged on the figures, so in fact there was no illegality.

Looks like a bit of a here.

P&P includes a service element – wrapping the goods in safe packing materials so it usually carries VAT.

However, you don't pay VAT twice.

The trader should total all the goods and services net of VAT, then add VAT on the whole amount.

Or he can simply add a postage amount at the very end which already includes VAT if the selling prices are listed as VAT included.

2 x Vodka And Tonic = Nono.

The other dodgy practice I've seen a lot on Wargames trading – esp E-bay firms – is when firms charge you for sending goods back.

Under the UK distance selling regulations the total money paid to the trader, plus your reasonable costs of getting the goods back to them, are refundable to you if you return the goods within 7-10 days for any reason.

Once accepted, the UK consumer law gives you protection for manufacturing defect for SEVEN YEARS. Stuff any "over a year so get knotted" responses. If it isnt a fault caused by normal wear and tear, but was problematic due to a manufacturing process, its 7 years.

Cheers,

I don't think RMD is at all at fault here. He asked a general question sparked off by a particular instance. He kept the name of the supplier out of it and I for one had no idea to whom he was referring until the supplier went public.

Same here.

The other dodgy practice I've seen a lot on Wargames trading – esp E-bay firms – is when firms charge you for sending goods back.

Depends why you are sending them back, if the goods are fine and the buyer simply no longer wants them then the last time I checked the law it was not made clear which side has to pay. (last checked a few years ago)
In the case of faulty goods, wrong goods etc then the company has to pay.

Beware ebay items- confusion reigns:
ebay guidelines in the UK
auction
suggest ebay auctions are not auctions and dsr apply.
OFT guide 'Shopping from Home': PDF link
suggest they are and dsr don't apply – unless its a buy now option. (and note dsr apply to business seller to consumer – not private deals or business deals).
Clear ? Good.

He kept the name of the supplier out of it and I for one had no idea to whom he was referring until the supplier went public.

However, the chunks of Ts&Cs he quotes if entered into a search engine would identify Fighting 15s as the supplier because of the unique wording. For instance, searching Google for "VAT is added to these prices at a rate of 20%. Although postage is exempt from VAT, companies must levy VAT on delivery charges according to the VAT rate of the contents" puts Fighting 15s right at the top of the pile. So although Mark was trying to be coy, he provided enough information to clearly identify Fighting 15s to anyone who can use the internet.

As I have explained above, the invoices show, in the sub-totals, the net prices plus the VAT due on the total. Mark had merely confused the ex-VAT sub-total for his figures with the VAT-inclusive price, which a little bit of maths would have revealed. He has seen and admitted his mistake, apologized to me privately, and frankly that should be an end to the matter, rather than having the thread spiral into more internet twaddle.

Not all of us care who it was that did this, I did not care, certainly not enough to and Google the T&Cs.

and frankly that should be an end to the matter, rather than having the thread spiral into more internet twaddle.

Let it go then?
You seem to be keen to blame a confused customer (who on purpose did not name your company) and muddy his name.
I know that if I were him and you had virtually accused me of being sly, I would not shop with you again.

Fighting15s.
If my post was the 'internet twaddle' concerned, (I presume it was as you quote me)I am sorry if you thought any criticism was aimed at you. It wasn't. I thought you cleared the matter up admirably, and rather than jeopardise your good name, I thought the way you handled this was sensible and polite, and made me, for one, more likely to buy from you than less.

My concern was with other commentators who seemed to suggest the OP was out of order for asking a question of the TMP readers. I did not and do not see his question in the same vein as those who publicly condemn without pursuing obvious queries of suppliers. As far as I am aware all my twaddle has been factual, accurate and made no comment about your practices which appear completely above board and reasonable.

As for whether I should be allowed to comment on something on a public forum, as long as it doesn't offend Bill or break any laws, I see no reason why I should not, twaddle or not.

Guy

You seem to be keen to blame a confused customer (who on purpose did not name your company) and muddy his name.

Spiralling, spiralling…

into what?

Actually Angelbarracks, you are quite right. Apologies, I typed it in a rush.

I meant to say that the goods can be returned within 7 days for any reason for a full refund, including the cost of postage & packing out to you.

Returning the package to the supplier is usually at your own cost as a consumer unless the goods are faulty, in which case the Sale of Goods Act 1979 causes the trader to reimburse the custoemr's return postage.

I also should have stated that this applies to trading under Ebay from a shop there or as a "buy it now" type sale. Auctions have their own (different) laws re the contract.

Sorry for any confusion.

Please read the following carefully…

If you are selling RETAIL in the UK ALL YOUR PRICES must inlude VAT….that's it..no exceptions. Several cases each year are prosecuted.

Unless the items are exempt, or zero rated.

The query wasn't about VAT on the goods but the service of posting. When Royal Mail supplies postage it is exempt (you don't pay VAT on the stamps) but YOUR service – sticking the things on and putting them in the post IS VATable and you have to account for it to HMRC.

I'm beginning to see what he meant about spiralling!

….so postage and packing rates listed on a retailer's website must include the due VAT….You can't add VAT later in the purchase procedure.

If you are selling RETAIL in the UK ALL YOUR PRICES must inlude VAT….that's it..no exceptions. Several cases each year are prosecuted.

Only if you are over the VATable registration limit or have voluntarily registered.

The vat rules change every year and include lots of nasties to avoid manipulation.

For example, Beware of 'Unless the items are exempt, or zero rated.'

I am afraid not, if it ends up becoming a 'service' and that just includes acting as an agent and paying something for someone

As a consultant, we often have to recover expenses on behalf of our client's and these sometimes include zero rated services. We then have to charge VAT on these when we recover the costs from our clients. It is easier to ask the client for a cheque directly payable for the service because of it. The best example I can think of is when you make a planning application to the council which as a council service is zero rated. Your architect will ask you for a cheque to pay it directly to the council because paying direct rather than through him will save you the vat element.

Two things:
1)Operative word was :'Retail'
2)HMRC guidelines on postage – You pay VAT on the delivery including postage at the rate the goods posted are charged at.
Zero = Zero

as an ex HMRC person I'd also point out that as with all tax systems, its the lower and middle end who pay (and get prosecuted) and the upper end who have enough money and clout to avoid paying up – even some colleagues who are still there say they are ashamed at the way the top level management have been wined and dined by certain big telecoms companies etc – when those of us at lower grades were always threatened with being strung up for taking even a biscuit or sandwich if offered

Power tends to corrupt…
Plus ca change.

"I did not care, certainly not enough to and Google the T&Cs."

Nor I, but the responses here from fighting 15's told me all I needed to know about the company.

Wow, threadromancy at work…

The key point: the original poster discovered he was wrong and apologized.

As I posted on TMP link according to HMRC guidelines: "Most retail prices on bills and receipts include VAT – it is not shown separately. However, some may also show the VAT element as a separate line. This doesn't mean you're being charged extra – it just shows how much tax is included in the price."

I, regrettably, have as a result of this thread learned the folly of trying to resolve any issue with an identifiable customer through a consumer affairs board, let alone try to explain why a customer is mistaken. I fully accept that I should have waited for the customer to email me in due course for an explanation and let the TMP discussion take its own erroneous path without hazarding my own comments.

And don't think I don't appreciate the irony of that last statement. :-)

Perhaps if certain companies and there are three at work here had taken a more considered approach to what I saw as a genuine question from a poster then they would understand better when some consumers see their responses as a bit OTT.

Interesting the frame of mind to think that someone would Google the T&C's which did not cross my mind, but then maybe I am too simple….

Just my 2p and perhaps some useful customer feedback if you are interested.

RMD thanks for posting the question as it has taught me a few things I did not fully understand about VAT.

Why have I just read all of this, when I knew 5 minutes in that it was a simple error?

Please god, let it die. Yes, I'm an arse. Will you all please stop bringing this thread back to remind me?!

;o)