Amazon intros early VAT cut

The government’s VAT cut doesn’t take effect until Monday, but one online retailer just couldn’t wait and has already introduced it. Amazon has created a promotional code called “LOWERVAT” that’ll give you a reduced rate of VAT instead of the full 17.5 per cent. Presumably Amazon’s decided to take a small financial hit on …

[Anonymous Coward]

oh bum

I'd just done most of my Xmas shopping on Amazon too. Ah well, it would only have saved me the price of a pint. Life goes on.

[Paul]

Refund if price goes down

I believe Amazon have a, somewhat hidden, policy that if the price of something you have bought from them goes down within a specific period you can claim a refund to take you to the lower price. I wonder if that would also apply in the case of items bought before the VAT is reduced compared to prices after?

[Flugal]

Mumbo jumbo?

"Firstly, the retailer’s only reduced the VAT rate by 2.13 per cent and not the full 2.5 per cent. Why? Well because of some complicated mathematical mumbo jumbo, it claimed."

It's not too complicated. For example, if you have £100 and add 10% you have £110. Subtract 10% of £110 (i.e. £11) and you're left with £99, not your original £100.

Same principle applies.

[Oliver Humpage]

It is the full 2.5%

If you reduce the VAT on an item from 17.5% to 15%, that's the same as applying a 2.13% discount to the original "inc VAT" price.

So they are giving you the full VAT discount, but by reducing the total price by 2.13%. Makes perfect sense.

[Anonymous Coward]

Car

I just placed an order for a car at the new rate of VAT, the order is placed, it's just not going to go on the books until Monday ;)

Any reasonable retailer will make that kind of deal, it just doesn't make sense to wait, otherwise people will just hold off on purchases. Which makes the books look even worse than they probably are.

[Gareth Jones]

Bit slow

They're behind wiggle.co.uk

[H3N0451]

They're not the only ones

Online cycle shop Wiggle have also put their rates down to 15%:

http://www.wiggle.co.uk/h/option/VAT

[Craig]

Clever

Clever because if they didn't do it via the promo code, you would have been able to take advantage of their generous price-drop-refund scheme several days earlier :)

But loads of retailers have done this already, Amazon don't deserve this mention tbh. Overclockers for one went down to 15% almost immediately after it was confirmed.

I assumed these retailers aren't taking the hit, but rather doing a bit of an accounting fiddle so these orders look like they came after the weekend? Who knows...

[Eddie Edwards]

You're not ...

You're not going to tell me that this is bad because they don't offer the VAT reduction on books, are you?

[Anonymous Coward]

@Flugal

Some more math is needed:

Your Price: VAT: VAT Amount:

£115 15% £15

But £15 is *not* 15% of £115, it is 3/23 of £115.

You can work the VAT fraction out:

Tax Rate

-----------------

100 + Tax Rate

So, VAT at 15%, the fraction is:

15 = 3

--- --

115 23

It used to be 7/47ths now it is 3/32rds

Regards,

SW

[Dogbyte]

Call me cynical...

But if they didn't do this nobody would buy anything until Monday.

Mine's the one with the firmly closed wallet in the pocket.

[Anonymous John]

What happens if you use the code, next week?

Do you pay tax of 12.5%?

[Anonymous Coward]

is 32rds...

....pronounced like thirty turds?

[Ben Mathews]

Also...

www.overclockers.co.uk have been at 15% since the announcement.

[Stu]

Easy Calculator

As there's a little confusion about the fact it's not a 2.5% reduction in the cost, there's an easy calculator for the VAT change here: http://howmuchvat.co.uk/

[Stuart]

Free Money (if you are vat registered...)

Ahem - they will still charge you 17.5% on a reduced pre-vat price. So if you are VAT registered you still get 17.5% back. A double discount ;-)

[David Gosnell]

Not the only one?

What's the betting Alistair Darling's grasp of maths is just as questionable?

http://news.bbc.co.uk/1/hi/scotland/7749515.stm

In summary, our worthy chancellor and the man best placed to get us out of our current mess, oh yes, cocked up a rise in the duty on spirits supposed to exactly negate the VAT reduction, and spectacularly failed.

[Rob Beard]

SVP and brastop.com

SVP are also offering a discount until 30th November, I think it's 2.5% off or something. Sods law I just ordered some bits from them and I aint putting in a special order just to get the discount.

Brastop.com are currently offering 17.5% off until November 30th which spurred my other half to get some new sexy undies. Good on you Alistair, in a way you've spurred my other half to spend out on something that in a way will make my day.

Paris because I bet she's got a selection of sexy undies.

Rob

[Anonymous Coward]

Pahhh

Pixmania are giving 2.5% off

Use the code VATCUT to get your 2.5% OFF EVERYTHING

[Anonymous Coward]

@Anonymous Coward

Yes when it comes to VAT it is always turds! And my mistake it is 3/23rds :P~

SW

[Elrond Hubbard]

definitely not the first to do this

I saw overclockers do an early VAT drop last week, then wiggle a couple of days ago - now amazon.

[Anonymous Coward]

Not any more...

"I believe Amazon have a, somewhat hidden, policy that if the price of something you have bought from them goes down within a specific period you can claim a refund to take you to the lower price. I wonder if that would also apply in the case of items bought before the VAT is reduced compared to prices after?"

Amazon discontinued this policy a few months ago (except for pre-order items) :(

[Anonymous Coward]

Just PR

Isn't VAT a legal requirement? If so, then Amazon cannot simply decide to reduce the amount of VAT paid - that would be illegal. All they've done is reduce the amount charged to the customer - the amount of VAT on those goods is still 17.5%.

[Phil]

Re: Refund if price goes down

"I believe Amazon have a, somewhat hidden, policy that if the price of something you have bought from them goes down within a specific period you can claim a refund to take you to the lower price."

Amazon have now dropped this policy. I tried to claim a refund last week and got the following response:

"Further to your email, we regret to inform you that we do not extend a post-order price guarantee and only orders placed on or before September 01, 2008 are eligible for a price difference refund under the Post-Order Price Guarantee policy. We are very sorry regarding this issue."

[Mark Aggleton]

@Phil

However, I pre-ordered a DVD from Amazon which was released on Monday. As the supermarkets were selling it at a significantly lower price than Amazon they have given me a fiver refund.

[Rob Haswell]

Me too

I've already post-dated a few invoices.