Coffee Chains and Vat

lr1277

Hi


I am not sure if this is the right place to put this question, but don't think I could find any better on these boards.


I know Starbucks gets a lot of criticism for the amount of corporation tax it pays, but I have a question about VAT.


I got a latte with an extra shot of espresso. Total cost £3.10.
Cost of latte £2.60
Cost of extra shot: 50p


But in the itemised receipt, only 52p was paid in VAT.
Surely if VAT is 20%, Starbucks should have paid 62p in VAT. The only way the 52p is correct is if they paid the VAT on the latte but no VAT on the extra shot.


I then checked a Costa Receipt.
For a coffee product costing £3.45 (I can't remember what I ordered), Costa only paid 58p. Surely they should have paid 69p VAT.


I know VAT is complicated and there was some kind of EU ruling suggesting where food and drink was bought with minimal service, then VAT is not applicable.


Any thoughts on the amount of VAT paid?


Thanks in advance.

agrinnall

You have made a fundamental error, and Starbucks have got it right.

You have confused the VAT inclusive price that you have paid with the VAT exclusive price on which the VAT is calculated.

Total price paid was £3.10, of which VAT was 52p.

Subtract 52p from £3.10 = £2.58

20% VAT on £2.58 = 51.6p, rounded to 52p.

Add £2.58 and 52p and you're back to £3.10.

To calculate the VAT component of a VAT inclusive price you need to multiply it by 0.1677 rather than 0.2. Try it on the Costa price.

PasturesNew

Oh dear... maths fail.

lr1277

Thanks for the info Agrinnall