Topic ID 3986
hi all read article in the evening standard last night about restaurants not passing on the VAT cut. has anyone noticed this in Hertford?
Reply ID 57795
Here's a link to the article for those that are interested... [url="http://www.thisislondon.co.uk/standard/article-23595737-details/Restaurants+refuse+to+pass+on+VAT+cut/article.do"]Restaurants refuse to pass on VAT cut[/url]
Reply ID 57801
"Introducing the cut would involve changing the prices to awkward numbers." Incredible! It would appear that, at present, the combined cost of all the ingredients on every single one of the dishes on their entire menu has the amazingly coincidental property of adding up to precisely the right seed value so as to produce a conveniently nice, round, figure after 17.5% is added? Astonishing! I wonder if Ripley's or Fortean Times know this?
Reply ID 57802
quote:Awkward for who, I wonder. And what exactly is "an awkward number"? Why would £6.85 be more awkward than £6.99? Businesses are more than happy to use "awkward numbers" like 6.99 instead of 7. And then there's the other quote: "It's a huge amount of work in a short period of time... We just can't afford to have teams of people sorting it out." Teams of people???? By my calculation this should knock 2.1% off the price of any given price (I worked this out without a "team"). Can they not just put a note in the menus saying that all prices will be reduced by 2%? And this is a classic: "YO! Sushi... said it would not change prices as it thinks clients will be confused." Oh yes, I'm constantly confused when I go into my favourite supermarket to find they've changed their prices because they've got a special offer on. I certainly won't be going there again. Are they serious??? I would certainly hope than none of Hertford's eateries are so contemptuous of their customers' intelligence.
Originally posted by Pez
"Introducing the cut would involve changing the prices to awkward numbers."
Reply ID 57804
The comments on that article are well placed though. The vat cut seems to me to always have been to benefit businesses and not individual people. No one is going to spend or buy more just because the price has come down a couple of %, however lots of businesses could well be given a reprieve because of this sudden increase in profit gained by not passing the cut on. At the end of the day, it's more important for the economy as a whole that the businesses stay open. So if the restaurants decide to keep their prices the same, it's their choice, and of course the proof will be seen in whether their custom drops or not. if it does, it would be very easy to reverse it - but i doubt anyone would notice. Besides, a "real" restaurant not a chain will have a menu that changes every week, so you'll never know whether the prices have come down anyway!
Reply ID 57805
cafe rouge have dropped the VAT to 15% went there last night.
Reply ID 57806
I bet they will all rapidly put up their prices when VAT reverts to 17.5% in 2010, there will be no complaining then about "how much effort it will take to reprice everything".
Reply ID 57808
three cheers for cafe rouge then.
Reply ID 57815
are you not within your rights to refuse to pay the excess VAT? After all, VAT is added to the bill at the end, so you should be able to see what they're adding. can you not just point out it's wrong and say you'll pay 15% extra, but not 17.5%. Either that, or refuse to pay a service charge. Not really fair, because it hits the servers, not the business, ,but it may assist in seeing the change made
Reply ID 57817
I assumed they had all dropped VAT to 15%, just not necessarily dropped prices as a result.
Reply ID 57821
And what exactly is "an awkward number"? Why would £6.85 be more awkward than £6.99? Businesses are more than happy to use "awkward numbers" like 6.99 instead of 7 6.99 is used instead of 7 because if change is required it has to go through the til, a round number could be pocketed by staff (it may be a relic from the past)
Reply ID 57822
I wonder what would have happened to prices in restaurants if VAT had been advanced to say, 20% last week?[?]
Reply ID 57823
Price would have gone up.
Reply ID 57831
quote:Doooh..asked for that.[:I] But (for all but the smaller businesses)..... they would have been put up instantaneously (plus a little bit more for the trader) without any whingeing about how difficult it was to change the prices. Changing the VAT rate /price of your goods is just a mouse click away (with apologies to Jagger/Richards)
Originally posted by andleicester
Price would have gone up.
Reply ID 57837
I don't actually eat out that often in Hertford these days.........prefer to cook for friends at home. However,in future, I will ask if the VAT decrease has been passed on to me. If not, I won't pay it and they can take me to the small claims court if they wish. Don't bet on their chances
Reply ID 57838
I think that's just business. Which trader will give us the 2.5% rebate straight off? If it was 5% they would have a more difficult time of it. The hard fact is, we will get use to the traders keeping the rebate for themselves and find out the hard way further down the road.
Reply ID 57898
I understood that the problem small/independent traders had with the decrease was the timescales imposed. They had to relabel in a very short space of time. Usually they would have months to amend the prices. This is not to excuse restaurants not passing on the VAT reduction, although there is no law that says they have to. All they need do now is pay less of the money we pay to them over to the tax man as VAT. To put it in perspective, though, if you went into a restaurant and paid £25.00 for a meal with VAT at 17.5%, the restaurant would keep £21.28 and VAT is £3.72. Now that VAT is 15%, of that £25, the restaurant keeps £21.74 and VAT is £3.26. Do you really want to squabble over 46p in a £25 bill?
Reply ID 57899
What if it was a £12000 car?
Reply ID 57901
I was talking about a £25 restaurant bill because this thread is about restaurants. But if you must know, the squabble would be over £212 and I would no doubt be off to another dealer if he did not discount the car by at least that amount plus a bit more, given the current economic climate in the automotive industry.
Reply ID 57902
quote:Yes, actually, I do. Do you think they would be happy if I paid 46p less than the bill.?
Originally posted by 2929paul
I understood that the problem small/independent traders had with the decrease was the timescales imposed. They had to relabel in a very short space of time. Usually they would have months to amend the prices. This is not to excuse restaurants not passing on the VAT reduction, although there is no law that says they have to. All they need do now is pay less of the money we pay to them over to the tax man as VAT. To put it in perspective, though, if you went into a restaurant and paid £25.00 for a meal with VAT at 17.5%, the restaurant would keep £21.28 and VAT is £3.72. Now that VAT is 15%, of that £25, the restaurant keeps £21.74 and VAT is £3.26. Do you really want to squabble over 46p in a £25 bill?
Reply ID 57903
quote:Mind you, are we all so naive, as to believe the restaurants won't just put up their prices?
Originally posted by buzzquote:Yes, actually, I do. Do you think they would be happy if I paid 46p less than the bill.?
Originally posted by 2929paul
I understood that the problem small/independent traders had with the decrease was the timescales imposed. They had to relabel in a very short space of time. Usually they would have months to amend the prices. This is not to excuse restaurants not passing on the VAT reduction, although there is no law that says they have to. All they need do now is pay less of the money we pay to them over to the tax man as VAT. To put it in perspective, though, if you went into a restaurant and paid £25.00 for a meal with VAT at 17.5%, the restaurant would keep £21.28 and VAT is £3.72. Now that VAT is 15%, of that £25, the restaurant keeps £21.74 and VAT is £3.26. Do you really want to squabble over 46p in a £25 bill?
Reply ID 57904
quote:Well the prices are on the menu when you go in there and they include VAT, so I would think they will be pretty unhappy if you consume the food and then refuse to pay the full price for it. If you don't want to pay those prices, don't go in the restaurant. Which, it seems, you don't. Or, agree a price of £24.54 for the meal when you order it. I'm not trying to argue with you buzz. You are entitled to your view and if you don't want to pay the full asking price that the restaurant advertises then either stay at home, go elsewhere or negotiate beforehand.[:)]
Originally posted by buzzquote:Yes, actually, I do. Do you think they would be happy if I paid 46p less than the bill.?
Originally posted by 2929paul
I understood that the problem small/independent traders had with the decrease was the timescales imposed. They had to relabel in a very short space of time. Usually they would have months to amend the prices. This is not to excuse restaurants not passing on the VAT reduction, although there is no law that says they have to. All they need do now is pay less of the money we pay to them over to the tax man as VAT. To put it in perspective, though, if you went into a restaurant and paid £25.00 for a meal with VAT at 17.5%, the restaurant would keep £21.28 and VAT is £3.72. Now that VAT is 15%, of that £25, the restaurant keeps £21.74 and VAT is £3.26. Do you really want to squabble over 46p in a £25 bill?
Reply ID 57906
Thing is, VAT is a sales tax, levied at point of sale. The money collected for the tax is never - or is not supposed to be anyway - is not the retailer's. The retailer is, in effect, a tax collector. Yes, there is a delay between the sale taking place and the tax being passed on to HM Revenue and Bastards, and the retailer can invest it and keep interest on it until it is paid over. But the point is, it's money the retailer never really has. It's not a tax the retailer pays out of their profits, they pay it out of the pool of money they've collected and should have put aside ready for passing on. In the example above, if you went into a restaurant and paid £25.00 for a meal with VAT at 17.5%, the cost of the meal is £21.28, and the VAT is £3.72. However with VAT at 15%, the cost of the meal IS STILL £21.28, but the VAT is now £3.19, meaning the customer pays £24.47. The retailer still keeps the same as he did before, but the tax man collects less tax and the customer pays less. Which is the intent. So for the retailer to claim that he's losing money, or taking time to adjust prices, is nonsense.
Reply ID 57909
The retailer is still perfectly entitled to put up their prices though. And if that just so happens to be by 2.5%, then thats their choice. I did notice lots of odd prices in town yesterday, all that will happen is that these will end up being rounded up or down to a nice number over the next few months anyway. I see boots are taking it off at the till though - maybe thats the most honest way. then they'll just remove that reduction when it expires in a years time and goes back up.
Reply ID 57911
The problem is that in this country we advertise the product price with the VAT factored in, probably because the purchaser is usually the VAT payer (this doesn't happen so much for business transactions because in that case the purchaser is usually NOT the VAT payer, as they'll re-sell the product or use it as part of providing services and thus claim the VAT back). Many countries list the price of the goods/services only and a note that sales tax is to be added at whatever percent. I don't see why a retailer would want to notionally put a price up, just to justify not being bothered to recalculate a shelf price, to get that right would be more effort.. But of course, if they're continuing to collect 17.5% but come the end of the quarter only have to pay 15% on everything, then it's a nice little earner - for them. (all those 46pences will rather rapidly add up). They gain, we lose, and the VAT reduction is not designed to boost retailer's profits, it's designed to save the customer money, to get them spending again. You're right, the correct way to do it is to apply a reversal at the till via a reduction/discount, something like multiplying the rolled up (17.5%) purchase price by 0.852 ought to do it within a reasonable accuracy.
Reply ID 57912
quote:I agree, although I'm not sure if your maths is correct but I'll go with whatever you say right now since I can't find my calculator.
Originally posted by Pez
You're right, the correct way to do it is to apply a reversal at the till via a reduction/discount,
Reply ID 57913
Thats not my view or understanding of the reduction.. boosting business profits IS the key underlying point of the vat change. No one is going to spend more just because it's 2.5% cheaper. However if a business is struggling it could well be enough to keep it open a bit longer. 2.5% means way more to a business than it means to a consumer. Of course they marketted it as a thing for consumers, because they want them to think that. You have to read behind the lines!
Reply ID 57937
I agree with that too but if you are taking the VAT reduction off the prices, the best way to do it is at the tills.
Reply ID 58019
I had a meal with friends at an Indian restaurant in the town on Saturday, a rare occasion, and one of my friends asked for a VAT receipt. A quick calculation of the bill showed we were being charged 17.5% VAT. Although the food and hospitality was good, we decided not to leave a tip as we figured they'd already received it which, with a wry smile, we pointed out. The usual 'goodbye, see you again soon' message on exit wasn't there and we had to ask for our coats which hasn't been the case since we began going there, albeit sporadically, since around 1998/99. If we all play by these rules, restaurant owners might get the message that they can't take the p*ss out of the punter in these economic times. Due to financial reasons, under the current economic climate, I doubt we'll be going back sooner rather than later although when the time comes to visit a restaurant in the town, we may give this particular place a miss. The strange thing is this; The cash tip would have been around 8% of the bill and no doubt tax free. Who won? (if it's even a game to eat-out anyway) We did.
Reply ID 58020
Whilst I agree with your sentiments, James, it's the waiting staff that lose out. I always give the tip in cash rather than add it to the bill, as you can never be sure that the waiter will get the tip. In the circumstances you describe, the restaurant still gets the extra dosh, while the waiters don't get anything. I would just refuse to pay the extra. It's illegal
Reply ID 58024
quote:You are right on this one. As someone who always asks for (and often needs) a VAT receipt, I would not accept a receipt showing the wrong rate. I couldn't use it.
Originally posted by buzz
Whilst I agree with your sentiments, James, it's the waiting staff that lose out. I always give the tip in cash rather than add it to the bill, as you can never be sure that the waiter will get the tip. In the circumstances you describe, the restaurant still gets the extra dosh, while the waiters don't get anything. I would just refuse to pay the extra. It's illegal
Reply ID 58028
quote:Oh my God, I agree with Buzz again. How scary is that! [:D] Always give a cash tip directly to the waiting staff, not to the establishment. That way it's a transaction purely between the two parties. Sorry, off-topic I know [:)]
Originally posted by buzz
I always give the tip in cash rather than add it to the bill, as you can never be sure that the waiter will get the tip.
Reply ID 58030
quote:Perhaps you're growing old gracefully, Steve![:D][:D][:D]
Originally posted by Stevequote:Oh my God, I agree with Buzz again. How scary is that! [:D] Always give a cash tip directly to the waiting staff, not to the establishment. That way it's a transaction purely between the two parties. Sorry, off-topic I know [:)]
Originally posted by buzz
I always give the tip in cash rather than add it to the bill, as you can never be sure that the waiter will get the tip.
Reply ID 58057
quote:Buzz - We actually paid the bill in cash and left the mints, no animosity on our part, just no tip. VAT was charged at 17.5% as the prices were the same as in June when we last went. Maybe you are right - a tip for the waiters next time - even though the bill was good business for them as we were in there for a long time and propped the place up for a few good hours. [:)]
Originally posted by buzz
Whilst I agree with your sentiments, James, it's the waiting staff that lose out. I always give the tip in cash rather than add it to the bill, as you can never be sure that the waiter will get the tip. In the circumstances you describe, the restaurant still gets the extra dosh, while the waiters don't get anything. I would just refuse to pay the extra. It's illegal
Reply ID 58058
James I'm confused. Was the amount of VAT shown on the bill so that you could calculate it to be 17.5% or did you take it that the VAT was not reduced because the prices were the same as in June?
Reply ID 58060
Like a lot of people, we have found certain foods we like and therefore order them on a visit. Having been to this restaurant several times before, we had a menu from June which compared exactly with what we ordered in December. Each item that we bought was listed on the receipt and the prices were the same as June and as stated previously, therefore included VAT at 17.5%. We didn't have a problem with the VAT charge being at the 'old' rate as the food was excellent. In our eyes we were being charged more than we should have been and therefore didn't tip. Simple.
Reply ID 58064
Maybe they put their prices up on 1st December, thereby offsetting the reduction in the VAT rate.
Reply ID 58066
That being the case, the restaurant would/should/could have advertised the reduction in VAT. The silly sods didn't do it like most other places I have been to, telling me that VAT had been either slashed to 15% or even removed. The fact is that it is not a legal requirement, just an offer from the government in these hard times to boost business which isn't working in retail as people ease up on spending. 'Dog bites Dog' springs to mind at the moment.
Reply ID 58073
quote:It may not be a legal requirement to reduce prices, that would be too much of a intervention by any government, but it is required that VAT is not charged at a rate other than that which is declared. Adding the difference to the ex VAT prices to keep the totals the same is acceptable, but involves a fair bit of number crunching.
Originally posted by James007
That being the case, the restaurant would/should/could have advertised the reduction in VAT. The silly sods didn't do it like most other places I have been to, telling me that VAT had been either slashed to 15% or even removed. The fact is that it is not a legal requirement, just an offer from the government in these hard times to boost business which isn't working in retail as people ease up on spending. 'Dog bites Dog' springs to mind at the moment.
Reply ID 58077
The restaurant might have taken the view that they had kept the prices to the consumer down during the period that their costs such as heating and lighting doubled.
Reply ID 58080
quote:Yes, and no doubt the flying pork trotters were a bargain at the price[:)]
Originally posted by 2929paul
The restaurant might have taken the view that they had kept the prices to the consumer down during the period that their costs such as heating and lighting doubled.
Reply ID 58089
Not much number crunching £1 excluding vat at 17.5% = 1/1.175 = 0.85 £1 excluding vat at 15% = 1/1.15 = 0.87 So for every pound on the bill the restaurant is now making 2p extra profit. or they could reduce their oveall prices by 2% (not 2.5% as many people incorrectly believe)
Reply ID 58092
quote:2.13% to be accurate [:)]
Originally posted by jez_p
or they could reduce their oveall prices by 2% (not 2.5% as many people incorrectly believe)
Reply ID 58094
quote:If you don't have a problem with being charged at the old VAT rate...that's fine, it's your decision. However,not leaving a tip does not hurt the restaurant, it hurts the low paid waiters/waitresses who look for that as a major part of their income. I really can't support your view on this.
Originally posted by James007
Like a lot of people, we have found certain foods we like and therefore order them on a visit. Having been to this restaurant several times before, we had a menu from June which compared exactly with what we ordered in December. Each item that we bought was listed on the receipt and the prices were the same as June and as stated previously, therefore included VAT at 17.5%. We didn't have a problem with the VAT charge being at the 'old' rate as the food was excellent. In our eyes we were being charged more than we should have been and therefore didn't tip. Simple.
Reply ID 58182
quote:2% is perfectly accurate 2.13% is more prescise
Originally posted by Stevequote:2.13% to be accurate [:)]
Originally posted by jez_p
or they could reduce their oveall prices by 2% (not 2.5% as many people incorrectly believe)
Reply ID 58183
quote:Prescise is inaccurate [:D]
Originally posted by jez_p 2% is perfectly accurate 2.13% is more prescise
Reply ID 58184
quote:2% is perfectly accurate 2.13% is more prescise [;)]
Originally posted by Steve
2.13% to be accurate [:)]
Reply ID 58188
At least the`rate paid is reduced too, in catering. In my sector, I now have to invoice 2.5% less, but pay the same as I did before to HMRC. Not helpful! Oh well, at least I don't have menus to reprint and tills to re-program. I can see why prices might be left as is just to cover that cost.
Reply ID 58192
quote:I don't understand how that can be? You don't have to pay HMRC any more than you collect on their behalf..?
Originally posted by shunt
In my sector, I now have to invoice 2.5% less, but pay the same as I did before to HMRC.
Reply ID 58193
quote:Most small businesses, which don't have high materials/stock costs, use the flat rate scheme (you pay a percentage based on gross turnover, but can claim nothing back on purchases). Some of these flat rates have been reduced and some have not, so some businesses have lost 2% of their net income by this change.
Originally posted by Pezquote:I don't understand how that can be? You don't have to pay HMRC any more than you collect on their behalf..?
Originally posted by shunt
In my sector, I now have to invoice 2.5% less, but pay the same as I did before to HMRC.
Reply ID 58212
Blimey. I shouldn't be surprised, I suppose. Nothing much surprises me about the Inland Revenue any more..
Reply ID 58410
I saw in Cafe Nero that they are charging at the new levels but have not changed the prices on their price boards above the serving area. I for one dont mind being charged 2.5% less then the advertised price. I think this would be a good way forward for everyone espcially if the rate is to change further soon.....