alcazar

iTrader: (2)

Why is it that people in this country are ALWAYS ready to scam us?

Yesterday, I needed a litre of oil for the Xantia. I went to Wilco Motosave for it. It was labelled £12.99, but the till gave the price as £13.49. I insisted on paying the marked price.

During a conversation with the lad there, who I know quite well as he admires the Scoob, he let slip that the price rise was because the tills had been changed, but the labels hadn't yet........to take account of the rise in VAT

Now stop me if I'm wrong, but a rise of £0.50 on an item costing £12.99 originally is around a 4% rise? And VAT is slated to rise by 2.5%

In fact the ITEM cost was £11.05, and VAT at 17.5% made up the other £1.94, by my reckoning, so an increase of £0.50 on £11.05 is actually a 4.5% increase..........2% more than the VAT alone.

So how many OTHER places will be scamming us on prices now and blaming VAT?

And WHAT, EXACTLY has the government put in place to STOP it happening?

Yep, you guessed it: nowt

Rescue Dude

iTrader: (11)

VAT doesn't go up till the 4th...................at least it's not supposed to.


Robbing *******!!

Terminator X

iTrader: (7)

When they went down though (15% VAT) it was by exactly 2.5%

TX.

tarmac terror

iTrader: (2)

Yep scamming going on all over the place.

Work canteen the worst of all - prices adjusted mid December. Permanent loss of my business there.

Yep - 2.5% increase not effective until 4th Jan. Profiteering going on all over the show.

Gordo

Errr, nothing to do with the government, it's up to businesses what they charge. Some will abosrb the increase (and not put their prices up), others will do as in this case and introduce it alongside their annual price increase.

This is simple comercial practice. If you're not happy, don't buy there.

Terminator X

iTrader: (7)

^^ Absorbing it is un-likely as it's a straight hit on their margin ... 2.5% less overnight

TX.

AndyC_772

iTrader: (2)

Probably depends a lot on the price of the item and whether it conveniently "rounds" to £xx.99 with or without the VAT increase.

Chip

Exactly!

alcazar

iTrader: (2)

Hold on........What's this "annual price increase" you talk of?

Are you SERIOUSLY saying that businesses can, or should just raise prices for no reason?
If so, is there ANY wonder we, in this country, get bent over and reamed at every opportunity?

AndyC_772

iTrader: (2)

Inflation?

joz8968

iTrader: (13)

Putting aside inflation, interest rates and govt-imposed duty and taxes for one moment...

A capatilist model means that vendors/service providers can charge whatever/whenever they want.

It's then up to the market to decide whether they're prepared to pay. If enough of the demographic do, then the vendor gets his way (and quicker/greater returns). If not, then the vendor will be forced to change his prices as appropriate... Or simply fall by the wayside.

It's as simple as that (which, of course, can be just as painful for the vendor).


But, of course, such an open system is open to, what can be perceived as, 'sharp practice' by the vendor...

StickyMicky

I bet the cost of running that business has went up by more than 4.5% over the past year anyway, most places held off raising prices to try and stop customers running away.

The 4.5% is probably VAT + extra expenses.

Lisawrx

iTrader: (1)

Have you never noticed prices changing all year round in supermarkets etc.? Not sure where the annual bit comes in, as this is common all year from what I see.

Working in retail, you see exactly what goes on... I know of prices being increased as far back as September to 'get ready' for the VAT increase, supposedly. By way more than 2.5%, but then that was probably within normal increasing. I suppose, providing they don't go up again, then it has prepared people well in advance, and they won't see any difference now.

I can do without being hit in the pocket as much as anyone (esp.being low paid), but I suppose businesses in these times are struggling too, so it's hardly surprising they are increasing their prices asap.

Moley

iTrader: (9)

Agree 100%

All the ''buy before Jan, save on VAT'' deals are crap.... the shops/retailers put their prices up a few months ago.

The shops will be making the same profit as in June/July.... it's just that they've been making an extra 2.5%(+) for the last few months.

Lisawrx

iTrader: (1)

Exactly. No wonder they are eager for us to spend now (well last few days). Last bit extra money in their hands.

Terminator X

iTrader: (7)

VAT is VAT though so just gets added to the nett price ... most if not everyone will just add the 20% rather than 17.5% giving us all a higher price overnight.

TX.

c_maguire

Think it through.
From 4th Jan all parts I buy in and then sell on to my customers will cost me more (by a minimum of the 2.5% VAT assuming my supplier adds nothing else on). My price to my customers for these parts is based on the total price I pay (inc. VAT and delivery etc) plus my mark-up and then plus the VAT I have to charge them. Therefore unless I reduce my margins the price my customer pays will ultimately rise by more than 2.5% come 4th Jan.
Wilco may be taking advantage but they may just as likely be paying their supplier more for the oil etc and just selling it on using the same profit ratios.

AndyC_772

iTrader: (2)

Not really... for one thing, if you're VAT registered, you claim back the VAT that your suppliers charge you, so the increase won't make any difference to your parts costs.

But even if for some reason you didn't: suppose you buy a part from your supplier which originally costs £10. You pay £10 + VAT @ 17.5%, which is £11.75.

Suppose your mark-up is 30%, you then charge your customer £11.75 + 30%, plus VAT, which works out at £15.27+VAT = £17.95.

When the rate goes up, the cost to you is now £12. Add your margin and VAT and your customer now pays £18.33. That's an increase of 2.1% overall, which is exactly the same as you'd expect (ie. it's the same as 1.200/1.175).

c_maguire

This isn't realistic.
Let's say I currently buy a frequency inverter for £200. The delivery is £30 so I pay the supplier £230 plus VAT at 17.5% giving a total of £270.25.
A mark-up of 50% gives £405.38 and with VAT at 17.5% a grand total of £476.32 to my customer.
Now even assuming my supplier's price only increases by the 2.5% VAT I will pay the supplier £230 plus VAT at 20% giving a total of £276. A mark-up of 50% gives £414 and with VAT at 20% a grand total of £496.80 to my customer.
This is therefore a rise of 4.3% to my customer.

I would make a few points:
VAT is a cumulative tax in that it can be charged many times on a single product from source to end user
Whether or not an individual/company in the supply chain is VAT registered and can claim the VAT they pay back is academic in most cases - if a sole trader who is not VAT registered sells a product (that he will have paid VAT on of course) then his customer will indirectly pay this VAT as the trader will factor it into his end price. And if his customer sells the sole trader's service on (including the product) then VAT may well be added again. The point I'm making here is that separating the VAT from the total product price at any point in the chain when calculating mark-ups etc. is unlikely as it is just too much hassle, and therefore as you move up the chain the VAT on an individual item will continue to increase relative to that items original purchase price.

You could argue that I am taking advantage of the VAT increase by making more profit (in £) on items I sell on, although I will be surprised if the price I pay my suppliers only rises by the 2.5% VAT from previous rates. And companies selling parts are tying up capital on the shelves with the risk attached so why not?
As it goes, supply of parts is only a small part of my work with the majority of my charges for labour. Labour charges will only go up by VAT this year as I have full control over those costs.

markjmd

iTrader: (11)

I would 100% argue that you're taking blatant advantage, if you're VAT registered but despite that still calculate your mark-up on the VAT-inclusive price, and not the ex-VAT price.

What possible justification could you have for doing this, regardless of what the VAT rate might have been before or after the rise?

Bicco

iTrader: (6)

Our nasty company as steadily increased the prices over the past months to supposidly ease customers into the VAT increase, intending to keep the prices the same in January, however it has had zero effect on sales and the margin is up, so they will be adding the extra 2.5% anyway. Thieving scum, wonder how many more companys will be doing this?

Leslie

I suppose they can charge what they want.

This has seemed to be the land of the great rip off for years now.

Les

c_maguire

You are being naive.
Check out the original post. Taking into account the fact that places like Wilco who sell direct to public are keen to use psychology on us by pricing everything at a+99p or in this case a+49p, it would appear Wilco are as morally corrupt as you think I am.
If their oil is so outrageously expensive then I suggest the OP buy his oil at his local Citroen dealership.
Consider this:
For the previous 15 years I have worked for 3 OEM equipment manufacturers in the printing industry, who manufacture, sell and then service/repair their equipment. In all cases the default mark-up on parts was in excess of 100% (often significantly more) so the chance of me (or any of my customers) being concerned about whether my mark-up is pre-VAT or not is negligible in view of the saving they are making anyway.

AndyC_772

iTrader: (2)

OK, hands up - dumb math error, sorry. You're right that the end cost goes up it you charge your usual margin plus the new higher rate of VAT, and also pay a higher initial price for the item you're reselling.

What I don't understand, though, is why you're not claiming back the VAT you've paid on the original cost of the part. That's where the 'double whammy' effect is coming from. If you're VAT registered, the cost to you of the part remains at £230 both before and after the increase.

Of course, you're still free to charge your customers whatever you like - but if you're claiming the VAT back on items you're selling them, don't be fooled into thinking you "have" to put your prices up by more than the 2.1% that the VAT change alone would explain. The "real" calculations should be:

Pre-increase: selling price = 230 * 1.5 * 1.175 = £405.37
Post-increase: selling price = 230 * 1.5 * 1.20 = £414 - an increase of 2.1%

alcazar

iTrader: (2)

So inflation is a catch 22 then? Prices have to go up BECAUSE of inflation, which then CAUSES inflation, so prices have to go up........

Now me, I thought price rises were mostly caused by the suppliers prices going up? Silly me.

Chip

Yep , called the inflationary spiral, a situation in which price and income increases may each induce further rises in the other

Chip

johnfelstead

Indeed, and if you are not VAT registered and so not claiming VAT back, you then can't charge people VAT on the purchase, that's illegal.

You can of course absorb the cost increase to yourself in the sale price of the goods you sell, but you can't state you are charging VAT on the product, you have to sell in a none VATable way to the buyer, who if they were VAT registered are then unable to claim back the VAT portion of the sale.

That's why to be able to charge VAT on an item, you must be VAT registered and provide your VAT registration number on the invoice.

GlesgaKiss

We could argue all day about knock-on effects, and the prices of individual goods and services can rise through factors only affecting them in particular, but over the long-term the general rise in the price of things is an issue of money supply. That's why businesses put prices up every year. There is no way around it, unless price fixing appeals?

alcazar

iTrader: (2)

It just seems so Catch 22. They put prices up, so we ask for more pay, so they put prices up so we ask............

Why don't we just STOP, and price according to raw materials plus a bit of profit. Why does it HAVE to be this endless price/wage rise?