"House of Fraser" UK on-line clothing store still charges international customers VAT for items ship

[Devoti]

I have a question/need advice from the forum who has experience buying clothes & shipped from the UK.


I recently ordered some items on-line with House of Fraser to be shipped to me in the United States. Before purchasing the items, I reviewed there Terms & Condition page and noted that the terms regarding VAT states "All prices shown include the applicable VAT rate. If your order has been delivered outside the EEC, please note that VAT has not been charged." (http://www.houseoffraser.co.uk/Term...IAL_CONTENT_LEGAL_INFORMATION,default,pg.html)

I interpreted this that the purchase price would be adjusted once it has been determined the items will be shipped outside of the Uk & EEC. I was still charged VAT.

When I raised the issue House of Fraser, they informed me yes you are indeed outside of the EEC and no we will not to be paying VAT for your items but we are still charging you for it and keeping the money (profit).

Does this seem like normal business practice and did I incorrectly interpret the terms? I have purchased from many different UK stores over the years and this is the first time a store charged me VAT and kept the VAT as profit. I know this normal when I'm actually in the UK buying but not when I ordered outside and have it shipped outside.

Has anyone else experienced this? I'm pretty miffed especially when they told me they were going to charge me for VAT and not even send it to the tax man. There are essentially making 20% profit above retail on international clients. I guess it's good for them if they can get away with it but no way am I buying form them again.

Thanks for your input.

 

[Devoti]

Here's a screen shot of HoF terms & conditions

 

[Chowkin]

Same with Thomas Pink, although they put it slightly differently. They argue that they have different prices for local UK customers and international ones and it just so happens that the difference is exactly the VAT! I only buy from them when they are on sale and ask for free shipping which they sometimes agree to.

Other retailers, e.g. Charles Tyrwhitt, TM Lewin, offer full VAT deductions.

 

[codhead]

As a Brit, it's not good to hear of such practise, it does show us in a bad light, especially when we should be looking to grow exports. HoF are a mid-range department store chain and I'd be surprised to find much, if anything of their range was exclusive and not available elsewhere.

The counter argument is we Brits often pay a $/£ parity price, what may cost $100 in the US costs us £100 when bought from a .co.uk website.

Retailers are certainly under pressure but if you'd bought the item from a physical HoF store, you would have the opportunity to reclaim VAT on exit from the UK

 

[Devoti]

I was a little unaccustomed to this and does put a bad taste in my mouth. It was for a Ted Baker suit.

Do you think I misinterpreted how the terms and conditions written thinking they would deduct the VAT during checkout?

 

[ShayaEXQT]

They only don't have to deduct the VAT if they aren't registered for it (meaning they aren't making £77,000 a year in sales - which is highly doubtful). In any other case, it pays for them not to charge it as they will be able to claim it back from the tax man.

Whatever the case is, I don't think this is standard practice.

 

[Devoti]

They only don't have to deduct the VAT if they aren't registered for it (meaning they aren't making £77,000 a year in sales - which is highly doubtful). In any other case, it pays for them not to charge it as they will be able to claim it back from the tax man.

Whatever the case is, I don't think this is standard practice.

I think they do make more than £77,000 a year on international sales. It's a rather large size chain of stores with a big website presence but I maybe wrong.

They replied to me saying if I can prove that there "Terms and conditions" were wrong then I would have a case but they say I don't. I guess I'm just asking does anyone think they are misrepresenting themselves in there terms? The customer service person at HoF was rather cheeky.

Thanks everyone for your help.

 

[Devoti]

Has anyone else been charged VAT when placing international orders from the UK (aside from T. Pink) ?

 

[Journeyman]



Other retailers, e.g. Charles Tyrwhitt, TM Lewin, offer full VAT deductions.  

Actually (although I could be wrong), I think that Charles Tyrwhitt went down the "no VAT deduction for international customers" path a year or two back. I remember that there was a thread here about it - I'll try to dig it up.

ETA - Found it - here's the thread from April 2011: "Charles Tyrwhitt policy change - No Value Added Tax refunds!!!"

A number of (US-based) people in the Charles Tyrwhitt thread seemed to be arguing that it doesn't matter and that the person who started the thread was just trying to be sneaky by ordering from the UK CT website, rather than the US CT website. That's all fine and dandy if you live in the US - but there are a lot of people outside the US and the UK and we still have to pay international shipping and no longer receive a VAT deduction.

As I said in that thread:

I could be wrong, but I don't think that what Charles Tyrwhitt is doing is illegal, because they do not appear to be charging VAT to overseas customers and then failing to pass the VAT on the the UK government. Instead, they appear to be exercising a form of price discrimination - third degree price discrimination, if I remember my undergrad studies correctly. Whilst I don't think that it is illegal, I do think that it is foolish of them and that it will backfire. Whilst CT's policy as quoted above states that it is being done "in the interests of fairness and consistency", I don't think that it is particularly fair as they are making more money from international customers by charging them what is, essentially, a higher price. If competitors such as TM Lewin do not follow suit, then I think that CT risks losing customers to competitors who do not exercise price discrimination.

Has anyone else been charged VAT when placing international orders from the UK (aside from T. Pink) ?

I could be wrong, but I don't think that you're actually being charged VAT as an international customer in this situation. What these companies are saying is that they are charging you (as an international customer) a price equivalent to the total amount paid by a domestic customer, which is the nett price plus VAT. So, you're not being charged VAT, you're just being charged a higher price than the domestic customer and, coincidentally, that price exactly equates to the VAT-inclusive amount paid by the domestic customer.

 

[ShayaEXQT]

Quote:

I could be wrong, but I don't think that you're actually being charged VAT as an international customer in this situation. What these companies are saying is that they are charging you (as an international customer) a price equivalent to the total amount paid by a domestic customer, which is the nett price plus VAT. So, you're not being charged VAT, you're just being charged a higher price than the domestic customer and, coincidentally, that price exactly equates to the VAT-inclusive amount paid by the domestic customer.

Now that is about as politically correct as it gets! I could see an English bloke trying to pull that off.

 

[Devoti]

Thanks for the comments but I have to think the overwhelming public perception & normal standard of business of any UK & EU store is that when you look at a price tag it includes VAT. If it doesn't then it's customers are properly notified, I don't think HoF did that, not even close. Now if it's not written in the terms and condition or spelled out on the product page, I think there being very sneaky by keeping the assumed portion of money that is supposed go toward VAT and in doing so creating a certain amount of fraud when comparing to normal business transactions.

Does anyone disagree with this?

If it's on the product page spelling it out then I think that's perfectly acceptable (I could choose to shop elsewhere) but I went deep into there website and I read the small print and it still does not spell it out keeping the VAT money for themselves.


PS. Journeyman: I agree, this effects everyone outside of the EU and US. The salt on the wound is the duty (tax) you may have to pay for the item shipped into your country.

 

[Chowkin]

Actually (although I could be wrong), I think that Charles Tyrwhitt went down the "no VAT deduction for international customers" path a year or two back. I remember that there was a thread here about it - I'll try to dig it up.

ETA - Found it - here's the thread from April 2011: "Charles Tyrwhitt policy change - No Value Added Tax refunds!!!"

A number of (US-based) people in the Charles Tyrwhitt thread seemed to be arguing that it doesn't matter and that the person who started the thread was just trying to be sneaky by ordering from the UK CT website, rather than the US CT website. That's all fine and dandy if you live in the US - but there are a lot of people outside the US and the UK and we still have to pay international shipping and no longer receive a VAT deduction.

As I said in that thread:

I could be wrong, but I don't think that you're actually being charged VAT as an international customer in this situation. What these companies are saying is that they are charging you (as an international customer) a price equivalent to the total amount paid by a domestic customer, which is the nett price plus VAT. So, you're not being charged VAT, you're just being charged a higher price than the domestic customer and, coincidentally, that price exactly equates to the VAT-inclusive amount paid by the domestic customer.

My apologies - I haven't bought from CT for quite some time. You are right - there is a price discrimination against non-EU customers and until they change this policy, they will NOT get my business any more.

 

[Dib]



I could be wrong, but I don't think that you're actually being charged VAT as an international customer in this situation. What these companies are saying is that they are charging you (as an international customer) a price equivalent to the total amount paid by a domestic customer, which is the nett price plus VAT. So, you're not being charged VAT, you're just being charged a higher price than the domestic customer and, coincidentally, that price exactly equates to the VAT-inclusive amount paid by the domestic customer.

I think this is exactly what they are doing - technically they are not charging you VAT (hence the line in their T&Cs which says "if you are outside the EU you haven't been charged VAT..."), but are charging non EU customers a higher price so that even with the VAT deducted it equals the same as what EU customers would pay with the VAT included. I do think their terms and conditions could and should be clearer in this respect though.

In my experience, the majority of retailers I have dealt with will deduct VAT when shipping orders outside of the EU but from time to time I do come across some who take a similar approach to House of Fraser (i.e. they say they won't be charging you VAT but will adjust the price to ensure you are paying the same as EU customers).

 

[zippyh]

I think the real point people are missing is that the OP is getting his undies in a bunch over a Ted Baker suit.

I will admit that that retailer's terms are a bit ambiguous and perhaps even misleading, but it seems foolish to assume when you're ordering that the price shown on the final page before submit is anything other than what you're going to pay without confirming with them that they are in fact going to issue you a refund for VAT.

 

[APHK]

Marks & Spencer is another culprit.