VAT increase on take out coffee?

anything I don't mind · 7 Jan 2011 at 12:58

What would be nice with this vat increase is if the massive business sector took on the cost themselves and did not pass it on to the consumer. Funny that is it not. When the tax went down, prices stayed the same, so the businesses made extra money. But when it goes up they put their prices up. Why don't these massive corporations take a hit out of their profit, instead of passing it on to the struggling consumer.

Mr Jack · 7 Jan 2011 at 13:19

Tom0 said:
The Canteen have paid VAT on buying the coffee in to make it. What does it matter where it's consumed?

No, they don't. You've failed to understand VAT.

The VAT that is paid by any company for materials is reclaimable. If a builder buys some wood and uses that wood to build you an extension, you pay VAT to the builder and the builder pays VAT to the woodyard, but when they come to settle up their VAT with the revenue they subtract the VAT they paid to the woodyard from the VAT they received from you.

mame · 7 Jan 2011 at 13:25

Ready to eat food has VAT added to it. Cans of pop have VAT but 2 litre bottles don't. Didn't Pringles have an argument over this as they said that a tube was to put in the cupboard rather than a ready to eat snack. If you happen to walk round Makro or somewhere similar, you quickly see the pattern of which food items have VAT.

The Halk · 7 Jan 2011 at 13:32

mangobreeder said:
profiteering

Profiteering. I've never seen the word used in that context without the person being economically dim.

Of course they're trying to make more money. It's the point of a business. If you don't like it, then do what you have done and don't buy coffee there. They'll set prices at the level that gives them the maximum profit.

They are not on a charitable mission to sell coffee at the lowest price possible.

'Wes · 7 Jan 2011 at 13:39

If it was your business, you would do the same.

valve90210 · 7 Jan 2011 at 13:40

JBuk said:
per cup though i'd be suprised if each of those amounted to more than a penny each except for maybe the disposable cup

You'd be quite surprised then!

I'll get the figures from my mother if I remember when I next see her but I seem to remember the profit per cup being only a small proportion something like 10pence for a coffee costing £1

Also you need to remember that prices of things such as tea, coffee, sugar etc can fluctuate considerably from the suppliers so as the end supplier of a consumed product you need to build in a little lee-way in the final price else you would have annoyed customers with your price going up and down the whole time.

Valve

Greebo · 7 Jan 2011 at 13:42

There are an awful lot of VAT rules which don't make sense. As said, in general if you have "added value" then VAT is chargeable. Hence why it's called Value Added Tax.

A couple of (interesting) things for you.

A fish and Chip shop is the VAT man's favorite business. Why? Practiculary everything the chip shop buys in is zero rated and everything they sell has VAT charged.

Another weird thing is that VAT is not meant to be charged on basic foodstuffs and essential items, just luxury items yet H M Customs refuses to remove VAT from sanitary items on the grounds that they are defined as a "luxury" despite women's groups trying to get it removed for years.

Vonhelmet · 7 Jan 2011 at 13:48

Greebo said:
Another weird thing is that VAT is not meant to be charged on basic foodstuffs and essential items, just luxury items yet H M Customs refuses to remove VAT from sanitary items on the grounds that they are defined as a "luxury" despite women's groups trying to get it removed for years.

Pretty sure sanitary stuff is reduced rate, rather than standard rated, but even so.

The counterpoint from a male perspective is that razors and other shaving goods are vatable at the standard rate.

Mr Jack · 7 Jan 2011 at 14:30

vonhelmet said:
Pretty sure sanitary stuff is reduced rate, rather than standard rated, but even so.

The counterpoint from a male perspective is that razors and other shaving goods are vatable at the standard rate.

Those are not really comparable items.

mangobreeder · 7 Jan 2011 at 14:45

The Halk said:
Profiteering. I've never seen the word used in that context without the person being economically dim.

Of course they're trying to make more money. It's the point of a business. If you don't like it, then do what you have done and don't buy coffee there. They'll set prices at the level that gives them the maximum profit.

They are not on a charitable mission to sell coffee at the lowest price possible.

You are not in a position to make comment like that, as you know nothing about me.

There is a difference between increasing the to take into account the VAT increase, and increasing the price and blaming it on the VAT increase hoping no body will notice.

The point of a business is not to make profit, It is to serve the will and the interests of the stakeholders. (which is generally to maximise wealth)

If profit was the only purpose of business then you would not have not for profit businesses.

Also business do not set prices simply to maximise profit you should read about

Loss Leaders and Demand Based Pricing

ScoTTyBEEE · 7 Jan 2011 at 14:48

EVH said:
How about this..

Buy a cold pie at a petrol station - zero rated
Buy a warm pie at a petrol station - full VAT
Buy a cold pie & a microwave / means of heating it yourself - zero rated

It's a minefield.

Edit: damn you von

Is this how some places work. You buy it cold and then use their microwave for free to heat it up?

The Halk · 7 Jan 2011 at 14:50

mangobreeder said:
If profit was the only purpose of business then you would not have not for profit businesses.

Also business do not set prices simply to maximise profit you should read about

Loss Leaders and Demand Based Pricing

Not for profit business is the same as alternative medicine. One isn't business the other isn't medicine.

Loss leaders are there to maximise profits - by increasing footfall.

Participant · 7 Jan 2011 at 14:54

Mr Jack said:
No, they don't. You've failed to understand VAT.

The VAT that is paid by any company for materials is reclaimable.

You have failed to understand VAT.

The above is not true.

mangobreeder · 7 Jan 2011 at 15:00

The Halk said:
Not for profit business is the same as alternative medicine. One isn't business the other isn't medicine.

Loss leaders are there to maximise profits - by increasing footfall.

well hang on, you just said, that businesses set their prices to maximise profit. not to increase footfall

The Halk said:
. They'll set prices at the level that gives them the maximum profit.

i think you need to make you mind up and read more about th emarketing mix and the pricing mix.

This is my last post on the subject, as i don't want to feed the troll any more.

The Halk · 7 Jan 2011 at 15:05

mangobreeder said:
well hang on, you just said, that businesses set their prices to maximise profit. not to increase footfall

I said BY increasing footfall.

Misunderstanding me on purpose isn't going to make up for your lack of point.

Cr0fty · 7 Jan 2011 at 15:08

M&S are doing £1 take away drinks at the minute.

Problem solved

Mr Jack · 7 Jan 2011 at 17:30

Robbie G said:
You have failed to understand VAT.

The above is not true.

Try reading up a little.

csmager · 7 Jan 2011 at 17:32

Mr Jack said:
Try reading up a little.

He's still right, though. Not every company can reclaim all their input vat as you implied.

You need to read this bit of that link you posted:

http://www.hmrc.gov.uk/vat/managing/reclaiming/partial-exemption.htm

Mr Jack · 7 Jan 2011 at 18:09

csmager said:
He's still right, though. Not every company can reclaim all their input vat as you implied.

Oh, I'm sorry did my brief note not explain every tiny complexity of VAT. Really, I'm totally mortified :rolleyes:

csmager · 7 Jan 2011 at 18:20

Mr Jack said:
Oh, I'm sorry did my brief note not explain every tiny complexity of VAT. Really, I'm totally mortified

It's actually quite common!

You said one thing, were corrected, then you reply stating you were right in the first place when you weren't. I was merely agreeing with the first reply.

I did find it rather amusing that you were correcting Robbie G, as I believe he's a tax advisor.