VAT Charged by Caterers

tightauldgit

the_lunatic_is_in_my_head said:

Manxman_in_exile said:

the_lunatic_is_in_my_head said:

screech_78 said:

I don’t get this. Surely the company can charge whatever they want, the cost price is irrelevant. They’re a business. 

We purchase sofas for £400 and sell them for £1200 plus. It’s not against the law. 

Of course, if they’ve changed the price from the one quoted, that’s different. 

But presumably you don't show the customer the £400 invoice.

Profit is an obvious element of business but so is customer service, OP will hopefully not need the company again but if friends ask for a recommendation any ill feeling may affect whether that recommendation is given or not, it's human nature not to wish to feel like you've "over paid", for want of a better word, and the situation could have been avoided if the company hadn't let the OP see their supplier's invoice. 

As someone working in customer service hopefully it would be something you do "get"  

It's not clear to me how the OP knows how much the caterer is paying for glass and equipment hire.  They haven't said "The cater has shown me the invoice from their supplier", they've just said that they've seen it.

Even if the caterer has revealed the invoice to them (whether by intention or by mistake) I don't see what difference* it makes.  Either the OP is happy with the price of £1250 or they aren't.  If they aren't, they need to get quotes from alternative caterers.

If they've already "employed" or hired the caterer, then my view is that the time to query their price has passed.  All that should have been sorted prior to engaging them.

Perhaps I'm being unduly harsh on the OP.  Perhaps I've not understood the situation properly or perhaps they haven't explained it very well, but I can't help feeling there's an element of "buyer's remorse" here and they are trying to extricate themselves from a bad arrangement that they've entered into through an error of judgment.


*I'd agree it might make a difference if the agreement was along the lines that the OP would pay a price represented by the actual cost to the caterer plus an agreed mark up, but I've seen no evidence that that is the case here.

Pretty much agree*, a competent business secure in the knowledge they are going to do their job to the delight of the customer should be getting their prices across as clear as possible, after all they shouldn't have anything to hide.

Maybe they didn't and that's why OP is asking, maybe they did and OP didn't "keep up" with the numbers and is now questioning just because they saw the invoice, no idea as we haven't had the info really so can only cover it from both sides  

*The price should have been sorted beforehand but that is the responsibility of the business, if they failed to provide the total price of the goods or services inclusive of taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated, then the consumer isn't bound by the contract (whatever that means, I don't know). 

In this case it should mean the OP could in theory go back and say 'I'm not paying that. Cancel the lot' and the caterer would have to eat the consequences but then again that's probably not going to help them if they've already got their wedding arranged. 

But there's a lot we don't know here before we can conclude anything.

screech_78

the_lunatic_is_in_my_head said:

screech_78 said:

the_lunatic_is_in_my_head said:

screech_78 said:

I don’t get this. Surely the company can charge whatever they want, the cost price is irrelevant. They’re a business. 

We purchase sofas for £400 and sell them for £1200 plus. It’s not against the law. 

Of course, if they’ve changed the price from the one quoted, that’s different. 

But presumably you don't show the customer the £400 invoice.

Profit is an obvious element of business but so is customer service, OP will hopefully not need the company again but if friends ask for a recommendation any ill feeling may affect whether that recommendation is given or not, it's human nature not to wish to feel like you've "over paid", for want of a better word, and the situation could have been avoided if the company hadn't let the OP see their supplier's invoice. 

As someone working in customer service hopefully it would be something you do "get"  

I don’t doubt that you know more than consumer law than me, but sorry, I still don’t get it. We had a situation where a customer service agent offered the customer an item (I believe it was a sofa) at cost price. It wasn’t in a colour or fabric that we stocked, but the supplier could do it and emailed us with the cost price. The agent then told the customer this price. The difference in cost vs. sale was £800. As a goodwill gesture, we went half on this with the customer but we didn’t have to. 

This sounds like an event where possibly numbers were changing regularly and so final price couldn’t be agreed until nearer the time. That was certainly the case with our wedding. Final numbers were only advised on a couple of days before and we got the bill from the caterers after.

I just don’t see how it’s relevant what the cost price was to the supplier. It’s their business what they charge, although I do appreciate that we don’t have the full facts from the OP on exactly what was agreed or how costs would be decided. 

It's relevant because the company's future customers may well be at the event and when they say to OP "hey your wedding was wonderful who did you use" a happy customer will gladly tell their friends to use them as well which saves a company in what I assume must be a highly competitive market at least some money in advertising. 

Nothing else should matter to the business, they are doing a great job to please their customer, in the hope of earning that word of mouth recommendation, in hope of making as much profit as possible, letting a customer see your supplier's invoice in this situation is foolish if you are going to charge that customer more.

Just to clarify I have said twice the company can mark it up if they wish (depending upon what was agreed), I simply don't find it surprising OP is asking the question. 

But customer service can only go so far. You cannot please everyone and some people are much harder to please than others. I have seen first hand the most ridiculous complaints from people who will be going to newspapers and telling all and sundry not to shop with us ever again. 

I don’t disagree it was foolish to let the customer see the invoice but we don’t even know how the OP came to see that. And customer service aside, as this is a consumer rights forum, I don’t believe there’s any legislation to say the company can’t charge what they want (obviously depending on what was agreed at the time - something else that’s not clear either).

tightauldgit

screech_78 said:

the_lunatic_is_in_my_head said:

screech_78 said:

the_lunatic_is_in_my_head said:

screech_78 said:

I don’t get this. Surely the company can charge whatever they want, the cost price is irrelevant. They’re a business. 

We purchase sofas for £400 and sell them for £1200 plus. It’s not against the law. 

Of course, if they’ve changed the price from the one quoted, that’s different. 

But presumably you don't show the customer the £400 invoice.

Profit is an obvious element of business but so is customer service, OP will hopefully not need the company again but if friends ask for a recommendation any ill feeling may affect whether that recommendation is given or not, it's human nature not to wish to feel like you've "over paid", for want of a better word, and the situation could have been avoided if the company hadn't let the OP see their supplier's invoice. 

As someone working in customer service hopefully it would be something you do "get"  

I don’t doubt that you know more than consumer law than me, but sorry, I still don’t get it. We had a situation where a customer service agent offered the customer an item (I believe it was a sofa) at cost price. It wasn’t in a colour or fabric that we stocked, but the supplier could do it and emailed us with the cost price. The agent then told the customer this price. The difference in cost vs. sale was £800. As a goodwill gesture, we went half on this with the customer but we didn’t have to. 

This sounds like an event where possibly numbers were changing regularly and so final price couldn’t be agreed until nearer the time. That was certainly the case with our wedding. Final numbers were only advised on a couple of days before and we got the bill from the caterers after.

I just don’t see how it’s relevant what the cost price was to the supplier. It’s their business what they charge, although I do appreciate that we don’t have the full facts from the OP on exactly what was agreed or how costs would be decided. 

It's relevant because the company's future customers may well be at the event and when they say to OP "hey your wedding was wonderful who did you use" a happy customer will gladly tell their friends to use them as well which saves a company in what I assume must be a highly competitive market at least some money in advertising. 

Nothing else should matter to the business, they are doing a great job to please their customer, in the hope of earning that word of mouth recommendation, in hope of making as much profit as possible, letting a customer see your supplier's invoice in this situation is foolish if you are going to charge that customer more.

Just to clarify I have said twice the company can mark it up if they wish (depending upon what was agreed), I simply don't find it surprising OP is asking the question. 

But customer service can only go so far. You cannot please everyone and some people are much harder to please than others. I have seen first hand the most ridiculous complaints from people who will be going to newspapers and telling all and sundry not to shop with us ever again. 

I don’t disagree it was foolish to let the customer see the invoice but we don’t even know how the OP came to see that. And customer service aside, as this is a consumer rights forum, I don’t believe there’s any legislation to say the company can’t charge what they want (obviously depending on what was agreed at the time - something else that’s not clear either).

It really depends what you mean by 'legislation to say the company can't charge what they want' - can they quote what they want? Yes. Can they just change the quote at will later? Not so sure. Can they say they will charge for items 'at cost' and then add a margin? Nope. Can they insist that cost price includes VAT and then charge VAT on top of that again? Nope. 

So there is legislation that limits what companies can do with respect to charging customers even though the basic tenet is that 'companies can charge whatever they want for their services'. 

the_lunatic_is_in_my_head

screech_78 said:

But customer service can only go so far. You cannot please everyone and some people are much harder to please than others. I have seen first hand the most ridiculous complaints from people who will be going to newspapers and telling all and sundry not to shop with us ever again. 

I don't doubt but OP seems to have come here before contacting the company to ask what's correct which is sensible and their mention of paying double VAT shows they don't understand how VAT work, which no doubt applies to most of the population. 

Had the apparent mark up not been the exact VAT amount perhaps OP wouldn't have questioned it but are because they had concerns the total wasn't calculated correctly, which I think is perfectly reasonable. 

screech_78 said:

I don’t disagree it was foolish to let the customer see the invoice but we don’t even know how the OP came to see that. And customer service aside, as this is a consumer rights forum, I don’t believe there’s any legislation to say the company can’t charge what they want (obviously depending on what was agreed at the time - something else that’s not clear either).

https://www.legislation.gov.uk/ukpga/2015/15/section/51/enacted

This section applies to a contract to supply a service if—

(a)the consumer has not paid a price or other consideration for the service,

(b)the contract does not expressly fix a price or other consideration, and does not say how it is to be fixed, and

(c)anything that is to be treated under section 50 as included in the contract does not fix a price or other consideration either.

(2)In that case the contract is to be treated as including a term that the consumer must pay a reasonable price for the service, and no more.

Just for reference as it doesn't apply here (I'm positive the charge OP is questioning is reasonable, mark up or not)  

Jumblebumble

Manxman_in_exile said:

the_lunatic_is_in_my_head said:

tightauldgit said:

EJHome said:

Manxman_in_exile said:

EJHome said:

Hi All, I think this is far more complicated than I first realised. 
I'll try and provide some figures for clarity. Firstly I would assume they are Vat registered, as they are a large company and definitely intending to charge us Vat. 

Our Quote looks like follows.
TOTAL COSTS: Item Cost Food £ 2,761.00
Hire & Equipment £ 1,250.00
 Staff £ 1,925.00
Rubbish Removal £ 175.00
 Damage deposit £ 60.00
Street Food £ 250.00
TOTAL £ 6,421.00
VAT £ 1,284.20
TOTAL INC VAT £ 7,705.20

The Hire & Equipment line £1250 is a cost being paid direct to another company for glassware, crockery ect. I have seen this itemised quote which includes VAT in the £1250 figure. Our Caterer have clearly included this whole figure in their total and then added 20% vat. We are effectively paying vat on this line item twice is that correct? 

This might look like penny pinching but the whole thing is so expensive any saving helps. 

If you've agreed to pay £7705.20 then that's what you have to pay.

If you had any queries about how that amount was made up you should have resolved all that before agreeing to pay it.

Hire of glasses etc is not a disbursement.

Thanks for your thought about the disbursement or lack of. 

We haven't agreed to pay a set figure at all as our original quote was subject to change and it has changed a lot since we started often without clear communication which is why I am now questioning everything. 

What have you actually agreed to then? If you've signed up to give them carte blanche to just charge whatever they like then I dont think you have much comeback. 

When dealing with a consumer the trader should inform the consumer of the price, or how it is to be calculated, presumably to specifically avoid “ carte blanche to just charge whatever they like”

But isn't the problem here that the OP is querying a specific known part of the quote*?  ie the OP is querying how the Hire and equipment line of £1250 is made up?

I would argue that how it's made up is none of the OP's business.  If they thought it was excessive they shouldn't have accepted the quote* in the first place.

screech_78 said:

I don’t get this. Surely the company can charge whatever they want, the cost price is irrelevant. They’re a business. 

We purchase sofas for £400 and sell them for £1200 plus. It’s not against the law. 

Of course, if they’ve changed the price from the one quoted, that’s different. 

I'd agree with this.  The actual cost to the provider of "Hire and equipment" is irrelevant to whether or not the OP accepts their quote*.  If the OP thought it was too high they should have gone elsewhere...


*I'd have to say I'm struggling to understand what the OP is actually saying.  Are they saying that they accepted a quote of £7705.20 "subject to change" - in which case I don't see how they can query any specified individual part of that quote after they accepted it.  Or are they saying that they simply accepted an open-ended quote with no agreed price and that the "quote" of £7705.20 is actually the final bill?  (Sounds very unlikely to me...)

Perhaps I'm misunderstanding what the OP is saying (or they aren't explaining it very well) but I can't help feeling that they're trying to renege on an agreement they've already made because they don't want to pay the amount they've agreed

The OP has may or may not have been quoted  £1250 but they are being invoiced  £1500
There is no way any company should be quoting ex VAT prices to consumers

sheramber

The OP has not said the caterer has increased the quote.

It is the original quote charging VAT on something that caterer  have  paid VAT on.they are querying

here is a similar example  

https://www.accountingweb.co.uk/any-answers/can-i-be-charged-vat-twice

The cost at source is £2800 including VAT. The quote from the intermediary, to then supply and install was £3600 plus VAT - £4500 in total. To my mind that's double charging on the VAT.

.................

Otherwise that us exactly how VAT operates - A charges B plus VAT. B charges C plus VAT. C charges D plus VAT. And so on and so on until you reach the end-user.

VAT is a tax  on the process of selling , based on the value at the time it is sold , not on the product itself.

Jumblebumble

sheramber said:

The OP has not said the caterer has increased the quote.

It is the original quote charging VAT on something that caterer  have  paid VAT on.they are querying

here is a similar example  

https://www.accountingweb.co.uk/any-answers/can-i-be-charged-vat-twice

The cost at source is £2800 including VAT. The quote from the intermediary, to then supply and install was £3600 plus VAT - £4500 in total. To my mind that's double charging on the VAT.

.................

Otherwise that us exactly how VAT operates - A charges B plus VAT. B charges C plus VAT. C charges D plus VAT. And so on and so on until you reach the end-user.

VAT is a tax  on the process of selling , based on the value at the time it is sold , not on the product itself.

I agree with this
For the OP
The Caterer never owns the VAT. that belongs  to HRMC
The Caterer Pays the VAT to HMRC  on their profit only ( or loss if they sell less than cost ( , claiming back the VAT that they paid the supplier
 Loads of people dont understand
When VAT changed from 20% to 17.5% a VAT Registered customer asked us to reissue the invoice as they thought  be out of pocket by 2.5%  I had to explain why it made no difference 

Altior

It's certainly no benefit to the supplier, aside from possibly marketing a lower quote overall. But if the caterer is acting as an agent it makes it cheaper for the consumer of the services. Which makes sense as potentially the consumer could have paid the gross amount direct to the glass hire business, rather than paying vat on top of the gross. 

the_lunatic_is_in_my_head

Altior said:

It's certainly no benefit to the supplier, aside from possibly marketing a lower quote overall. But if the caterer is acting as an agent it makes it cheaper for the consumer of the services. Which makes sense as potentially the consumer could have paid the gross amount direct to the glass hire business, rather than paying vat on top of the gross. 

That's a bit simplistic  

Hire company 1250 charge is broken down as 1041.67 net with 208.33 VAT. Catering company charges OP 1500 broken down as 1250 net and 250 VAT. For VAT accounting the catering company records 208.33 as an output and 250 as input and hands over 41.67 to HRMC leaving the catering company with 208.33 gross profit on the deal.

Should the hire company not be VAT registered then the catering company simply pays 1250, catering then charges OP 1500 but has no output to record and hands over £250 in VAT making no gross profit on that element of the bill. In that situation OP would be better of (money wise) paying the hire company direct. 

There is also the possibility of margin schemes (although unlikely in this instance) and flat rate schemes to add in to the mix, although flat rate schemes are for simpler accounting with the idea you'd generally pay the same VAT bill.