Rip-off. Not at all.

  Arnie 12:27 02 Jun 2006
Locked

In the latest Web-User magazine, a reader was complaining of buying a Sainsbury’s £10 Skype voucher that only credited £8.70 to his Skype account.
He was awarded £25 for the best letter in that issue!

VAT is always added to any Skype website transaction. In fact only 15% (the Luxembourg rate), is charged.

£8.70 + 15% = £10.005, rounded to £10.
To some users it may seem that they are being ‘ripped off’ by Sainsbury’s. However, this is not the case.

I have just topped up my Skype account with £10 using my credit card. I was charged £11.50. (£10 + 15% VAT). Exactly the same rate as in the previous example.

For an explanation of the voucher scheme.
click here

For an explanation of Skype.
click here

  Stuartli 14:45 02 Jun 2006

But does Sainsbury make it clear that VAT has been included?

  dontmeshwithme 15:14 02 Jun 2006

If Sainsbury's are performing the transaction then surely they should apply the UK VAT rate of 17.5%?

  bosmere 15:30 02 Jun 2006

Arnie is correct about the VAT, but in terms of the Sainsbury voucher what's the difference between one of those at £10 and only getting £8.70 credited, whereas if you buy a mobile phone voucher you get the full £10 credited?

  wee eddie 15:45 02 Jun 2006

How anyone can expect to have their VAT paid for them, on top of the Voucher, is quite beyond me!

  Arnie 16:21 02 Jun 2006

If the Web-User had been able to pay £8.70 into his Skype account, he would have paid £8.70 + 15% VAT which = £10. (Remember the Luxembourg VAT rate).

On the other hand. If he had been able to pay Sainsbury's £11.50 for the card, he would have paid Skype £10 + 15% VAT = £11.50. (The amount I paid with my credit card).

Either way he would have been no worse off.
The final value money is exactly the same.

Hope I haven't complicated things!

  Arnie 17:47 02 Jun 2006

Stuartli.

Most large stores do not mention VAT at the point of sale. Since I did not buy a voucher from Sainsbury's I am unable to verify whether VAT was shown on the receipt.

Either way Both the writer and I were only charged 15% VAT in the final outcome.

dontmeshwithme.

Who knows? Maybe Sainsbury's get a bulk discount which covers the UK VAT rate and a little extra above their total running costs.

  Arnie 18:25 02 Jun 2006

"what's the difference between one of those at £10 and only getting £8.70 credited, whereas if you buy a mobile phone voucher you get the full £10 credited?"

No difference in principle, other than the VAT rates.

£8.70 + 15% VAT = £10 that one pays for the Skype card.

£8.51 + 17.5% VAT = £10 that one pays for the UK phone card.

The real value of the UK card is only £8.51.
The UK tax man gets £1.49.

The real value of the Skype card is £8.70.
The Luxembourg tax man gets. £1.30.

The 19p tax difference is due to the 2.5% VAT differential. (17.5% against 15%).

  Jimmy14 18:40 02 Jun 2006

very good point arnie

  ade.h 18:55 02 Jun 2006

Just as well that Skype is not from Germany; the VAT went up to 19% recently, so "disgusted from Tunbridge Wells" would be even more vocal!

  Arnie 19:47 02 Jun 2006

Germany 19% VAT. How about Eire?

I purchased a Juzt-Reboot PCI-NT Intelligent Backup card from Eire.

I was charged £36.42 + £4.92 Shipping costs = £41.34.+21% VAT = £50.02.

YES a whopping 21%.

The Germans are lucky.

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