VAT

[Paul Buswell]

I note that ECF has decided not to reduce Game Fee (or Direct Members' subs) following the recent reduction in VAT from 17½% to 15%.

It's a perfectly defensible decision, and the only reason I comment on it is because no one else has.

PB

[Kevin Thurlow]

But was it a decision? Has the matter even been discussed....?

[Paul Buswell]

A decision was taken by Robert Richmond as Finance Director; I did check the ECF's position before posting.

[Sean Hewitt]

A decision was taken by Robert Richmond as Finance Director;

Was it? How unilateral of him!

As Chairman of my county, I may just take the decision to take the VAT reduction anyway when settling our game fee bill, and pass it on to our clubs. Indeed, I believe that the intention of the reduction was to put more money into the economy through price reductions - not so that greedy companies like the ECF could trouser a grand or two!

[Richard Bates]

Just as a matter of interest, on what grounds is not passing on the cut "defensible"? I can see that not passing on the VAT cut is perfectly defensible for businesses who set their prices, VAT inclusive, in accordance with what the market can bear. Less so for those who set their prices in relation to a cost of provision/production. Is Game Fee not supposed to fund specific functions of the ECF? Have these functions suddenly become more expensive, or were Game Fee functions previously operating at a loss?

[Carl Hibbard]

Are you even "allowed" to not pass the reduction on?

[John Philpott]

Carl Hibbard asked

Are you even "allowed" to not pass the reduction on?

There is no obligation to pass the reduction on. The FAQs issued by HM Revenue and Customs on the VAT reduction state

Q3 Do retailers have to change their prices (and so pass on the VAT reduction to their customers)?

The Government is making this VAT rate change as part of a broader package of measures to give the economy a boost. Passing on the VAT reduction through reduced prices will stimulate consumer spending, and mean that both businesses and consumers benefit from the change.

The Government is looking to businesses to pass on the benefit to consumers, and has encouraged them to do so. Ultimately, however, decisions on prices, charged by businesses and paid by consumers, are for businesses rather than the Government.

[Paul Buswell]

Responding to Richards Bates' comment on whether it was defensible, I suggest he direct a question to Robert Richmond. However, Robert has pointed out to me:
that passing the reduction on would benefit those paying in arrears who would pay 15%, those who paid early would have paid 17½%;
that it is HMG's intention to restore the old rate on 1 January 2010;
that an increase in the early payment discount is a tool which he is considering.

Responding to Carl Hibberd's question on whether it was permissible, I did check with John Philpott as to the exact wording of ECF rules on fees, and those are not expressed in 'net of VAT' terms.

PB

[Richard Bates]

Responding to Richards Bates' comment on whether it was defensible, I suggest he direct a question to Robert Richmond. However, Robert has pointed out to me:
that passing the reduction on would benefit those paying in arrears who would pay 15%, those who paid early would have paid 17½%;
that it is HMG's intention to restore the old rate on 1 January 2010;
that an increase in the early payment discount is a tool which he is considering.

PB

Forgive my random musings, not based on any particular expertise, but is this really true? Surely the level of VAT paid depends on the tax date, not the payment date, or do the ECF treat the two as one and the same? This would seem a bit strange since it would make the "early payment discount" somewhat incongruous.

Of course if it is true, then the corollary is that changing the game fee with VAT would give an incentive for people to pay off their arrears in advance of 2010.

BTW I assume that VAT is charged on the discounted game fee, not the game fee itself.

[Matt Harrison]

I assume that Game Fee is paid when it's paid, and not in response to an invoice from ECF. Therefore I assume that ECF treats the taxation date as the date income is received. If it was the date on which the event that triggered the game fee, then ECF would have to pass the VAT to HMRC before they knew how much game fee they would receive.