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VAT Fun & Games

Dec 10 2008 12:34
Ashley Brown
College catering will not be passing on the recent VAT decrease directly, however will be using the additional profits to reduce targeted prices and introduce extra promotional offers.
What was the point of the VAT cut again?

As many people have noticed, the 1st December VAT change has not been reflected in lower staff prices for catering, nor will it be. Student prices (which are VAT-free) will also remain the same as previously, continuing to attract a 17.5% discount on the staff price. Instead, the extra income College derives from the VAT reduction will be spent in a number of targeted areas, including an additional donation to the ICU Summer Ball.

In a statement given to Live!, catering explained how the complicated VAT arrangements had impacted their decision. Because students are not required to pay VAT on a number of items the College has an arrangement with HM Revenue & Customs, where it is not able to reclaim the full amount of VAT it pays to suppliers (in a similar way to VAT for sports causes headaches for the Union).

The College catering operation is also only charged VAT by its suppliers on a small range of items, such as carbonated drinks, chocolate, crisps etc. Due to the VAT arrangements the overall change to a Mars bar is helpfully stated by catering to have been 0.3p. In the first week since the VAT change, the extra income across catering was given as £796 from staff transactions and £151 from student transactions.

The College statement continued:

"[It] is not the College's intention to benefit financially from this change in government policy. Catering is run for the benefit of the students and staff of the college on a 'Not for profit' basis."

The additional "marginal" income will be used for the following:

  • The SCR will be refurbished over Christmas and re-launch in January with a 25p discount on meals.
  • Additional promotional offers will be run for students throughout the year.
  • Catering will donate £2,000 to ICU Summer Ball.
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Discussion about “VAT Fun & Games”

The comments below are unmoderated submissions by Live! readers. The Editor accepts no liability for their content, nor for any offence caused by them. Any complaints should be directed to the Editor.
Dec 10 2008 15:01

Anyone with a sensible mind knows that changing the VAT will have zero effect on the RRP of most products.

Dec 10 2008 15:17

Unless these offers are plentiful and occur often, then College needs to do something better given that a great majority of students do NOT actually attend the summer ball and would not have this supposed ?2k benefit passed on to them.

Dec 10 2008 18:15

Didn't the JCR use to run "sandwich of the day" type offers, such as a more expensive sandwich for the price of a lower one? Where did they go to?

Dec 10 2008 21:48

@ "Offers" (Comment No. 2)

It doesn't make any difference because the student price is ex-VAT anyway so shouldn't be affected. The 'supposed ?2k benefit' in that case is essentially a freebie. It's the staff who are paying VAT on their purchases who lose out in this arrangement.

Dec 10 2008 22:15

The ?2k benefit is essentially a freebie as long as you ignore the ?4500 (and a bit more) that College are taking from students pockets!

Where's the other ?2.5k?

Dec 10 2008 23:28

And thats all they can offer us? I agree that when pooled together that money can do more good then the 5p I'd otherwise get off. Why not put water coolers in the JCR :P

7. Yeah!   
Dec 11 2008 00:01

Beer coolers!

Dec 11 2008 00:38

How did they make any money at all on student transactions? I don't understand.

If you get 17.5% off when you present your ID Card and the prices haven't changed then there should be no 'additional income' from students. We don't pay VAT! We didn't before! There should be no difference. Something's up there...

Dec 11 2008 01:09

Not everything is VAT exempt for students. Alcohol, for instance.

Dec 11 2008 08:05

Ah... that makes sense.

Although they don't sell much of that.

11. VATman   
Dec 11 2008 09:52

Not just alcohol... potato crisps (but not pringles), chocolate-coated biscuits (but not jaffa cakes), the article mentions fizzy drinks- those are probably the biggest ones.

12. snacks   
Dec 11 2008 10:57

Why crisps but not Pringles?

Dec 11 2008 14:16

VAT exemption for students means we don't pay VAT (with the exception of alcohol)... means that college are not really getting any extra earnings from the students be that crisps, chocolate-coated biscuits, etc... no?

15. dwm   
Dec 11 2008 15:04

College catering could probably also save some money by not printing out receipts for *every single transaction*, which they seem to have started doing recently..

16. Right   
Dec 15 2008 14:27

Nice to see they're refurbing the SCR and giving a 25p discount, whilst the JCR is the biggest dump in the world.

Dec 15 2008 16:32

The JCR has been refurbished twice in the past 5 years.

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