Storage company adding VAT

brightontraveller

stator wrote: »

If you thought what I was suggesting is dodgey you didn't understand it.
Companies can adjust their price whenever they chose, up, down or whatever. As long as they add on 20% VAT HMRC aren't interested. When VAT changed temporarily from 17.5% to 15% most of my invoices stayed the same and the companies sending them just charged me more so the invoie amount was the same, pocketing the difference. Then when VAT went up to 20% a lot of them still stayed the same, they absorbed the extra cost to avoid losing customers.
As long as the invoice shows the actual amount you charge the customer and the VAT is calculated correctly on that invoice there is nothing wrong.

The company in question has already reached the VAT threshold for this year, they can't amend previous invoices already paid that took them to that threshold, so that's got nothing to do with it.

I’,m taking what’s stated in OP into consideration taking aside company is under no legal obligation to make the original stated fee inclusive of VAT, The client is arguing with company over other charges (may make them even less likely accommodate clients wishes).

They may or may not have reached VAT threshold they could have voluntarily registered if so they would have known this meant an increase to there clients and already factored in damage this may cause reputation etc but still thought that it was prudent to do so again not looking favorably for client to get discount ?

They did reach VAT threshold and were not expecting to do so that scenario could mean business is doing better than forecast would mean demand and unfortunately for client less incentive for company to act favorably to there request?

If you talking morally then that’s up to business if your talking legally then they don’t have to offer discount.. Requesting companies change invoices, give discount to clients that’s already arguing over fee’s most companies would just think nutter and hard work they can jog on....

TheCyclingProgrammer

brightontraveller wrote: »

You don’t understand HM Revenue & Customs and VAT?[FONT=&quot]Any payment on invoice produced after the date of registration will be liable for VAT [/FONT]

When in comes to VAT your contract is absolutely irrelevant, Chancellor could change the rate every day or increase or decrease the level at which a company must become registered VAT is collected on behalf of HM Revenue & Customs.

You can attempt to argue the toss about them not notifying you but as it is not they but HM Revenue & Customs that are making the increase no legal argument there ?

I run a VAT registered business so I am well aware of how VAT works, thanks.

The company has to charge VAT (or more accurately they have to collect VAT on their sales and pass it on to HMRC).

That does not mean they have to add VAT on to their existing cost. They could just as easily continue charging existing customers within their 28 days notice period as VAT inclusive. So if they paid £100 before, for the next billing period they will play £100 INCLUDING VAT.

This is what I meant by "taking the hit on the VAT". They company will have to hand over the VAT on those sales and so by charging £100 inc. VAT instead of £100 + VAT they will lose out slightly. Customer pays exactly the same thing.

Then, after 28 days notice period has passed, they can charge the new price of £100 + VAT (so customer sees price increase).

If the storage company did not have the foresight to allow for the charging of VAT or changes in VAT rates in their terms, then IMO, they have to honour the contract. Which means the customer continues to pay the same amount until the 28 days notice period has expired. That they have to account for VAT on these sales now is not the customer's problem.

TheCyclingProgrammer

brightontraveller wrote: »

The haven’t increased there charges they are charging VAT that’s not the same as increasing your charges?

Nonsense. If they charged £100 before and then charge £100 + VAT then the customer is now paying £20 more. In a B2C transaction, where the end custom cannot reclaim the VAT, that is an increase in what they are charging.

If this was a B2B transaction between two VAT-registered businesses then it shouldn't matter as the customer can reclaim the VAT and there is no overall increase in cost, but it isn't.

TheCyclingProgrammer

brightontraveller wrote: »

With your interpretation of altering invoice to include VAT this could be dodgy legally and seen so by the VAT man ?

Please stop posting such nonsense.

A VAT registered business is entitled to charge whatever it likes for its services as long as it charges VAT on top at the correct rate.

If a business wants to discount its net price to maintain the same gross cost to the customer once VAT is added, they are fully entitled to do so. There is nothing dodgy about it, legally or otherwise.

In fact its quite common for businesses to absorb increases in VAT for limited periods for good publicity or customer goodwill. Conversely, when VAT rates decrease, there's nothing stopping businesses from doing the opposite and maintaining the same gross price (remember B2C transactions are normally price with VAT included) and pocketing the difference themselves (as they've effectively increased their net prices).

TheCyclingProgrammer

brightontraveller wrote: »

If you talking morally then that’s up to business if your talking legally then they don’t have to offer discount...

Well therein lies the rub. This isn't a matter of legality. Its a matter of contractual obligation.

If the contract stated that the fee was £xxx fixed for 6 months and that ANY increase would require 28 days notice (with the contract being poorly written so as to make no allowance for things like VAT registration/VAT increases etc.) then the price should remain £xxx (whether that's without VAT or including VAT) until such notice has been given.

Therefore if OP has not had 28 days notice I think they are well within their rights to request they are charged the same as they were charged before (only now it will be including VAT) until 28 days notice has been given and passed.

Risteard

I do not believe that the addition of VAT can be construed as a price increase on the part of the storage company. In fact I think it is a complete nonsense to suggest that, and therefore the OP is obliged to pay the VAT if he/she wishes to continue with the storage facility.

brightontraveller

All I can say too OP is good luck with arguing the increase based on what the company “should” and “could” do against its legal obligations and doing so in such a way that doesn’t run the risk of no storage or cost them far more than paying the vat would …. :rotfl: