Re: VAT reduction next monday
Quote:
Originally Posted by
Saracen
No joking, I have noted down a fair few key product prices, from a few potential suppliers.
It's not so much that I care much about what they do with the prices because I'll save money, because the amounts are barely significant. It's because I'm curious about their business philosophy, and whether they'll use this as a chance to exploit customers or not. It'll tell me something useful about people I do business with .... or might do it with.
Don't forget to note the £ vs $ prices too just to make sure they can't pin it down to "the exchange rate", unless they don't buy their stock in $ (I'm thinking about PC parts here as you can guess :D)
I agree though it'll be interesting to see who does try to gain more profit out of this though.
Re: VAT reduction next monday
Quote:
Originally Posted by
Saracen
IF prices go down to reflect the reduced tax, yes.
But if, as has been suggested, some shops keep their retail prices the same, then they've increased basic price and margin by the amount of the VAT reduction. And, as VAT-registered business, that affects me.
If that extra couple of quid per hundred is VAT, I can reclaim it. If it's extra profit margin, I can't and my input prices just rose.
Correct, but prices online (Scan is a good example) can fluctuate more then 2.5% each week. Even without a VAT rebate the decrease of 2.5% wouldn't influence my regular purchases.
Like you, I'm interested to see what businesses do. It would seem "skimming" 2.5% would hardly be worth it if they're truly a VAT registered company but in an industry with traditionally small reseller margins it wouldn't come as a surprise either.
Re: VAT reduction next monday
Quote:
Originally Posted by
Bugbait
Correct, but prices online (Scan is a good example) can fluctuate more then 2.5% each week. Even without a VAT rebate the decrease of 2.5% wouldn't influence my regular purchases.
Like you, I'm interested to see what businesses do. It would seem "skimming" 2.5% would hardly be worth it if they're truly a VAT registered company but in an industry with traditionally small reseller margins it wouldn't come as a surprise either.
Oh I'll have to just look at trends and comparisons. There'll be no categoric answer.
But I'm not so sure about that 2.5% "skimming" not being worth it. It is (albeit 2.13%) a small percentage of the sale price, but many online firms have pretty small margins because it's so competitive, and they rely on a small profit on a lot of transactions. If it's a £100 CPU, then the chip itself sells for abut £85. But what did they buy it for?
A couple of quid as a percentage of £100 isn't large enough to influence my buying decisions, but if you were making £2 profit and suddenly find the opportunity to make £4 profit, you've doubled your profit. That is significant.
The balance to that, of course, is that the areas with really tight margins like that are those where competition is really tight and, fortunately, that's exactly the market where competitive pressures will prevent firms from milking this, like online computer components. If they do, Joe Public will look at the competitors, see things are a couple of quid cheaper elsewhere and, by and large, switch suppliers. They really could only milk it if everyone else did too, and the chances of that? ;)
That'll keep 'em honest. :D
Re: VAT reduction next monday
Quote:
Originally Posted by
Bugbait
If you're VAT registered then the change has no "real" impact so just shop as normal if you qualify for a VAT rebate :).
yep same here lol
hum i wonder what happens to the invoices ive sent but not been paid ?
Re: VAT reduction next monday
Quote:
Originally Posted by
s3ds
yep same here lol
hum i wonder what happens to the invoices ive sent but not been paid ?
It depends.
If the invoice was sent in relation to goods or services supplied before the start date (1st Dec) then the 17.5% rate applies regardless of when you sent the invoice. So if you invoice mid-Dec for something you supplied in October, then you charge at 17.5% (and account for that to HMRC) as you would have before the change.
In the normal run of things, and assuming you aren't using the cash scheme not the accrual scheme, and aren't using a flat-rate scheme, then the general position is that the date you supply the goods or services is the tax date, so if you supply after 1st Dec, you use the new rate.
The exception to that is if you were paid before you invoiced. For example, you issued a pro-forma (not a VAT invoice) for a PC build in mid-Nov. The customer paid on the pro-forma, during November. You then buy the bits, build the PC and supply it after the start date of the change, i.e. in Dec. In that case, since the invoice was after the start date, it might seem that the correct rate would be 15%, but since you were paid at the old rate, the correct rate is the 17.5%.
Similarly, if you invice after 1st Dec but for goods/services supplied more than 14 days before the start date, you invoice at the old rate, even though you're doing so after the start date. So in that case, it's the date of supply that matters, even though you're invoicing after the new rate comes in.
Or, If the invoices you raised before 1st December were for goods or services supplied after start date, you have a choice :-
1) Leave the VAT at 17.5%, and account to HMRC for that
2) Reduce the VAT rate to 15%, account to HMRC for that 15% but you MUST issue a credit note/refund to your customers if you do this.
In direct response to your question, unless it falls into one of those exception cases, you've supplied goods or services prior to 1st Dec, and invoiced prior to 1st Dec, so the 17.5% rate was correct, and you account to HMRC for the VAT at that rate.
Note: I don't practice as an accountant, and the above is opinion and my understanding, not advice. If you aren't sure, check with your accountant or HMRC. They have some advice here.
Re: VAT reduction next monday
If you get a VAT invoice which shows the real price (plus tax) then I uspect you will get the reduction, but where retailers sell VAT inclusive prices, I guess that they will will keep the prices the same, pass on the 15% to the government and pocket the rest - cost neutral to the consumer, a small increase in profit for the retailer. Part of the problem is that (unlike the US) retail prices are advertised VAT inc. Imagine the situation if (say) petrol was adverised plus tax so you could see just what a huge amount of the the cost of a litre is actually duty and tax!
Re: VAT reduction next monday
appears scan have just added to their margins instead of passing on any savings =/ their 1tb samsung f1's seem to be the same price as they were last week with 17.5% as they are today with 10%
Re: VAT reduction next monday
Quote:
Originally Posted by
DragonStar
appears scan have just added to their margins instead of passing on any savings =/ their 1tb samsung f1's seem to be the same price as they were last week with 17.5% as they are today with 10%
Not entirely, I've noticed the BFG GTX260 Maxcore (even though on pre-order) go from £258 to £252 which is in line with the cut. It might be on some products but so far I've seen most of the items in my basket go down by quite a few £'s.
:thumbsup:
Re: VAT reduction next monday
perhaps its just coincidence then and the base price has increased due to the crappy exchange rate
Re: VAT reduction next monday
Quote:
Originally Posted by
DragonStar
perhaps its just coincidence then and the base price has increased due to the crappy exchange rate
It could be. I didn't note the prices of the hard drives.
Re: VAT reduction next monday
Well the GFX card I was looking at yesterday is exactly the same price today on EBuyer. VAT is right, so they took the VAT cut to profit.
Re: VAT reduction next monday
Hmmm, who would of thought cutting vat by 2.5% absolute, wouldn't kick start the economy..... How about everyone?
Re: VAT reduction next monday
Yes, it's complete bollox. Firstly, as we've seen, the 2.5% VAT cut isn't going to translate into a 2.5% reduction on prices. Secondly,, it isn't going to change the perception that people may not have work tomorrow and so are less likely to spend. Thirdly it isn't going to stop banks being much tighter on credit. Who is going to benefit from this then? Those who don't have to worry about work or credit, and who want to make big purchases that have VAT in them. The filthy rich. A great move from a supposedly Labour government.