Amazon intros early VAT cut

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?

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.

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.

Bit slow

They're behind wiggle.co.uk

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

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...

@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

What happens if you use the code, next week?

Do you pay tax of 12.5%?

is 32rds...

....pronounced like thirty turds?

Also...

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

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.

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.

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%.

Me too

I've already post-dated a few invoices.