8,000 year old wizard cannot magic VAT away.

16 May 2011

drawn by hikerartist.com. yesterday

You know how it is. The price says one thing, but by the time you get to the actual paying bit the price could be much more than you originally thought. Sadly, although this could be describing a cheap airline’s website, this is no longer necessarily the case, as more and more retailers follow their example and join the growing ‘drip-pricing’ culture assaulting consumers.

In a report last year, the OFT found that many companies were guilty of drip pricing, whereby consumers were given a basic price, with extras added as customers progress through the checkout process, before being told the higher total price. It said: "The OFT considers that it is misleading to not include in the headline price all compulsory charges that the consumer has to pay."

In a few weeks’ time, the OFT is expected to launch a full-scale inquiry into fees levied by cinemas, airlines, Government agencies and theatres when customers pay by credit card.Quite what they will do once they complete their inquiry and find that, yes, consumers are not given the final price upfront, is anyone’s guess.

However, one thing you do not expect to see as an added extra is VAT, it being a compulsory element of any VATable sale. However, in recent weeks Merlin, who owns the London Eye, Alton Towers, Chessington and the London Dungeons, has started to market tickets excluding VAT, effectively suggesting the tickets cost 20 per cent less than they actually do.

The practice has been described as misleading and contravening the OFT guidelines. Merlin got a bit stroppy, as old people tend to, and excused the practice by saying he was not the only one doing so. Magic he may be. Skilled in argument, I think not.

James Daley, the editor of Which! Money, said: "It's misleading for attractions to show prices excluding VAT as at first glance someone planning a family day out might think that tickets are cheaper than they actually are. Unless you're a professional childminder it's hard to imagine how you'd be able to claim tax relief on tickets to Legoland."

Merlin’s final word on the subject was that this new pricing strategy “will demonstrate the significant value for money their attractions offer, something often lost when compared to overseas attractions”, a direct dig at the Government, given that France only charges 5.5% VAT on tourist attractions. Quite why he doesn’t cast a spell and make the OFT disappear is beyond us.

So there you have it. If you are buying tickets to see lifelike replicas of human beings or a crumbly old castle, remember that the 20% discount is actually not a discount. Or go to France instead.

[Telegraph]

TOPICS:   Economy

3 comments

  • Richard
    Haha, nice article. Some interesting economics facts mixed with some classic bitterwallet humor rarely seen from fledgling Sam. Next stop is for you to investigate my Phones4U complaint! :-D Seriously tho, good work
  • bono
    Why not instead, stop paying tax by tearing up your birth certificate?
  • GentleGiant
    Childminders cannot claim VAT back; like Nursery schools they are VAT exempt, which means they cant charge it and cannot claim it back (any longer). You used to be able to voluntarily register for VAT and claim it back, but the infernal revenue service does not allow it any longer. I believe the rules say (or used to say), VAT excluded pricing can only be used where the main intended target is the business user, so AFAIK, Merlin is breaking the law.

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