Vat or No vat

Trantofish

Hi,
I'm new to this forum.

If a company offers you a goodwill monetary gesture, should they give you that amount less VAT

Example:

Company offered me £10:00 goodwill gesture which would come off my bill.

Bill arrived and gesture was less vat, £8.00

Should vat be taken and should they have advised me that the offer would be less vat at point of offer

Maybe trivial, but surely if you are offered £10.00 should it not be £10.

Thanks

Coopdivi

The VAT on £10 is £1.67 not £2.

Cyberman60

It sounds correct to me, but a bit of a scam IMO. Goodwill is not a refund, so that is the reason. If the company paid you the amount including VAT they would obviously be making a loss as they still have to account for the VAT to revenue and customs.

Hintza

Dismissing the 33p discrepancy. If you had bought something for £8.36 ex VAT then it would have cost you £10. Probably just about fair enough if a little mean.

bod1467

Bottom line is ... what's on the bottom line. The fact they've accounted for it on your invoice before applying VAT is irrelevant - your bill (the bottom line that you pay) is still £10 better off.

InsideInsurance

If someone said they'd give me a £10 off my next bill as a gesture of goodwill to me as a consumer then I would expect the bottom line to go down by £10 which means the net figure would go down by less than £10 to factor in the VAT.

If its a B2B agreement you normally talk in the net rather than the gross and so that may be the top line you expect to reduce

unholyangel

Cyberman60 wrote: »

It sounds correct to me, but a bit of a scam IMO. Goodwill is not a refund, so that is the reason. If the company paid you the amount including VAT they would obviously be making a loss as they still have to account for the VAT to revenue and customs.

Not sure how you come up with the company making a loss if they were to refund the £10 exclusive of VAT.

SuperHan

Is the gesture deducted before VAT is calculated?

Are you sure there is not an £8.33 deduction, and then a later £1.67 deduction to VAT? Often these things are done by pro rating the goodwill across VAT and gross to give a total £10 discount. Try calculating what the VAT charge is 20% of if it isn't clear.

For example, if my normal bill was £12 (£10 + VAT) and I got £10 goodwill, I would still expect to pay £2 that month, not have £10 off the £10 charge and pay nothing, if you get me.