Wednesday, 19 October 2011

M&S charging VAT on overseas orders


Like any self respecting British male I wouldn't wear anything other than M&S socks. Apparently David Beckham is a fan too.

When my current socks were developing holes I decided to order some new ones online from Marks and Spencer. Appalled by the price of suit trousers at David Jones I decided to order a couple of those too.

Purchasing from overseas UK VAT (sales tax) isn't due. I checked the M&S website before ordering and it says:
For goods and services delivered outside the European Union VAT is not charged although the price shown on the website remains unchanged. 

The way many UK websites work (TM Lewin and Amazon to name two I've used) is that they don't update the prices on their site, but the amount that hits your credit card excludes the VAT. I assumed that M&S would operate the same. It says the price "shown" on the website remains unchanged. It does not say "the price you are charged remains unchanged". It does clearly sate "VAT is not charged".

When I got charged the VAT inclusive amount I was slightly disappointed. I waited a couple of days to see if a VAT refund would arrive on my card. When it didn't I decided to contact M&S. The responses I received disappointed me more than being charged the VAT.

I emailed them asking about the VAT and received one of those standardised pro forma responses that didn't answer my question. I replied to the email re-iterating my question and didn't get a reply.

After a few days I decided to call customer services. I spoke to a polite lady who said she understood my issue, didn't know the answer, but would find out and get back to me same day. The only thing I received was the standardised pro forma email again. It still didn't answer my question and wasn't the personal reply promised.

I called the next day and spoke to one of the call centre supervisors. She was at least finally able to answer my question. M&S don't reduce their prices for overseas customers. The conversation went something like:
Me: Are you charging me VAT?
M&S: No.
Me: Why do you charge the VAT inclusive price to overseas customers when VAT isn't due?
M&S: That is our policy.
Me: Ok, so you policy is to make 20% additional profit from non-UK customers?
M&S: (Hesitation) I can see why you might think that, but that's not exactly how it works.
Me: So how does it work?
M&S: Ok yes, we do make extra profit.

There is no prid pro quo like free delivery or any other goodies to offset the 20% extra charge.

Is my interpretation totally incorrect? Am I an idiot for thinking M&S would behave like many other UK retailers?


I realise that this is a niche post, but hey, M&S annoyed me so I thought it deserved a blog. I did a Google and couldn't find much info so perhaps this will be a useful resource for future customers.

35 comments:

  1. Cheeky sods!

    Although it would never have occurred to me to import socks from a retailer halfway around the world, it is very naughty to simply absorb the VAT like that!

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  2. @BE - yes very cheeky! At a time when UK retailers are struggling this could be a real opportunity to move into new markets and boost sales. Why do they make themselves 20% more expensive just to extort a 'super profit' from overseas clients?

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  3. Great post - exactly the info I was looking for. Luckily I didn't hit the "Place Order" button before I found your post. M&S are missing out here.

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  4. I've just had the same problem with and order from M&S to New Zealand. My email correspondence from them states quite clearly that they don't charge VAT to non-EU countries but they do as VAT hasn't been deducted or refunded to my credit card. I emailed the CEO after getting nowhere with their customer services department but received the same standard reply. I have now emailed the correspondence to the UK Office of Fair Trading and made an official complaint. From reading this blog and others it appears that they are making a nice little profit from overseas orders.

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    Replies
    1. I am Annon below @ 2015 - how did your complaint go with office of Fair Trading?

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  5. Anon - Let me know how you get on with the OFT. I don't think M&S have charged us VAT, they have just made an additional 20% profit from us.

    I wrote this post due to my frustration in the wording of their website which isn't clear and subsequent frustration with customer services when I queried their pricing.

    From a business model standpoint I don't really understand it either. Overseas sales could be a big bigger business opportunity for them.

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  6. I would also like to know the outcome of this as I live in Norway and at the moment I am getting the same response from M&S regarding this . I have taken the matter up with HMCE and await their response. Its amazing that Amazon are able to incorporate into their system the means of supplying V A T free whilst M&S are not able to or more likely do not want to. It is a comnplete rip off.

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  7. I was ready to place an order but was confused about why my price at the end of checkout was not reduced, as it is when I order from Amazon and Boden. I have now not placed the order and have contacted Watchdog on their website. We'll see if they're interested......

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  8. It appears that M&S can charge what they like. There excuse is that they incur extra costs on overseas orders. What apathetic attempt at an excuse.
    Customs and excise also trading standards Say there is nothing they can do, so we can only vote with our feet. goodbye M&S:

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  9. I live in Australia(we have no tax under a $1000 on imported goods)and i only buy from M&S when they have a Free postage period,after noticing the VAT was included.I would have no problem with paying a goods tax here in Aus for the goods.

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  10. just had the same issue - how can they get away with it?

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    1. Chris - it seems rediculous to me, but they have obviously taken the business decision that that want to make an extra 20% profit from their overseas customers. Why they don't price themselves more competitively and try and get more customers is beyond me.

      Delete
  11. Also just had the same issue. It is the dishonesty that most concerns me. Nowhere on their site does it say that they will charge non-EU customers 20% extra and even the few words related to VAT on their help site are unclear at best.

    If they were more up-front and make it clear during the checkout process that they charge extra then at least we could make informed decisions as to whether to purchase or not.

    Presumably they fund their free/cheap shipping with this extra 20% but if that is the case I would much rather be charged the actual cost for shipping rather than 20% + a fixed fee (for Hong Kong), which is likely to be more than the actual cost of the shipping (based on my experiences ordering online from many UK stores for delivery to Hong Kong).

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    1. I am having the same issue with M&S, receiving the same bla bla about not charging non EU customers VAT whereas the reality is they do!! It is a scandal! In my neck of the woods they are also charging me 15 GBP delivery charges. They are making an extra 20% from me, so I'm voting with my feet and shall NOT be buying from them.

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  12. Well, since they have massively fouled up with their new site, a desperate attempt to get hip with the kids to try and make more money, I think now would be a good time to point out this continued malpractice again. Next offer free delivery to shoppers abroad so I don't mind the prices not being adjusted for VAT. But M&S charges quite a bit for delivery AND smacks on the VAT - not fair. I then get to pay customs fees because the tax-free limit is breached - because of the delivery charge. Not cool.

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  13. I live in Switzerland and have the same issue with M&S, also I'm charged 8% Swiss VAT and a £15 handling charge on top of the UK VAT for importing goods. M&S aren't the only company though - am having exactly the same exchanges with ASOS customer service as Richard had with M&S.

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  14. Well, they are still doing it! I, like others, was charged the "VAT/extra 20% profit" for an order sent to Australia and again I received a standard meaningless reply to my first enquiry.

    Well (a) I will never order on-line again from M&S and (b) I shall take every single chance I have, directly and on-line, to warn others about this scam!

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  15. Me too. I am very disappointed with M & S. Any other UK retailer I have ordered from for overseas delivery has deducted VAT at checkout. I too received the same responses from M & S. How do they get away with it?

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  16. Yes another in Hong Kong here... had the same 20% extra rip off despite the fact they already charge you a shipping charge. Other UK retailers we have used either a) have the facility to deduct VAT before you confirm payment or b) are willing to credit back the full 20% to your credit card (no admin charge) after you simply ask them on an email. This is really poor differentiating customer service, from a company that one has a reputation for good CS.

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  17. I am so relieved to read your blog Richard. I went through exactly the same torturous experience as you did with the M&S customer support team and I am appalled that they think it's perfectly acceptable to ship to Switzerland, but refuse to deduct the VAT. After four emails and two very long phonecalls - during which I was passed from one person to the next and none of whom could actually answer my question - I decided to compose another email citing cases of websites who automatically deduct VAT upon shipment to countries outside of the EU. I don't know what good it will do, but it has helped me to get rid of some of the frustration! You would think that a company such as M&S would be up-to-date and aware of the VAT regulations.

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    Replies
    1. Anon - I agree it is shocking. I think M&S do know the VAT rules and don't think for a moment they will be passing the money to the UK government. They are just making an additional 20% profit on overseas customers.

      Did you get free delivery? I heard from a friend in NZ that he recently got free delivery on an M&S order. If they don't give you the 'VAT' back, but do give free delivery that is something in my book. I had to pay both which I found so galling.

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    2. Richard - i have interesting news for you. Please respond and I will advise - 'we' need to pool resources!

      Delete
  18. Hi - has anyone had any good news with this issue? I am currently having the same conversations with Office Shoes who have told me it is up to me to claim the VAT back! I have sent them a copy of the VAT guidelines and asked for clarification of their policy!

    Does anyone know what companies like NEXT and ASOS do? Got to love Amazon!

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  19. Yes it is a scam , rort. look up definition/s. So what is anyone going to do about it?

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  20. Thanks for the chance to vent on your blog.

    Blatant gouging without doubt. People will vote with their feet. They're not the only retailer and if you read reviews it doesn't take long to realise customers are aware of the slipping quality of M&S products. They don't live up to the premium price charged it seems.

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  21. I entirely agree with the above comments. I now live in Australia and I have just spent 20 mins looking through their site to see at what stage of the order process VAT would be deducted. It wasn't, but as delivery was free on orders over £30 I let it go. I would mention that all my other favourite British sites do deduct VAT at check-out, eg Boden, Wool Overs, Fat Face and I think ..Monsoon.

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  22. Interesting read.

    On one hand, (for Canada at least), the VAT is compensated by free shipping.

    On the other hand, for socks I've had to pay 5% GST, 8% PST, and 16% duty on top of the whole thing - including the 20% (non-)VAT. Normally, if that was counted as shipping, and not the purchase price, you wouldn't have had to pay tax or duty on that amount.

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  23. I too have brought this matter to the attention of M&S, over 3 years since this blog post. As an ex-HMCE criminal investigator, I was aware that non-EU customers should not be charged 20% VAT on their purchases. The price to non-EU customers should therefore be lower on their website.
    I too got the standard reply that we are not being charged VAT but are being charged a higher price. I responded to them that basically we were being over charged. I got no reply.
    My guess is that, when M&S complete their VAT returns they account for the sales as zero rated and pocket the extra profit.
    I would suggest that someone with more time than me contacts Watchdog or You & Yours and runs an expose on this blatant rip off (well, blatant to those that understand VAT). Also a written letter to the CEO wouldn't go amiss. Don't bother with email or phone calls. Too easily rebuffed.
    Me? I will only buy when there is free shipping to OZ & NZ. which is about every 3 months. I see that Canadians get stung with all sorts of extras import charges. At least here in Oz there are no extra charges on imports under $1,000. So I pay what someone in the UK high street would pay.
    So I'll get my socks on the free shipping offers. The pyjamas I bought last year were of such poor quality that I won't be buying them again. And both my cashmere jumpers have shrunk on the first wash, despite following the washing instructions! Both of these items have had similar reviews on the M&S website.
    A retailer on the decline, methinks.

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  24. I too have brought this matter to the attention of M&S, over 3 years since this blog post. As an ex-HMCE criminal investigator, I was aware that non-EU customers should not be charged 20% VAT on their purchases. The price to non-EU customers should therefore be lower on their website.
    I too got the standard reply that we are not being charged VAT but are being charged a higher price. I responded to them that basically we were being over charged. I got no reply.
    My guess is that, when M&S complete their VAT returns they account for the sales as zero rated and pocket the extra profit.
    I would suggest that someone with more time than me contacts Watchdog or You & Yours and runs an expose on this blatant rip off (well, blatant to those that understand VAT). Also a written letter to the CEO wouldn't go amiss. Don't bother with email or phone calls. Too easily rebuffed.
    Me? I will only buy when there is free shipping to OZ & NZ. which is about every 3 months. I see that Canadians get stung with all sorts of extras import charges. At least here in Oz there are no extra charges on imports under $1,000. So I pay what someone in the UK high street would pay.
    So I'll get my socks on the free shipping offers. The pyjamas I bought last year were of such poor quality that I won't be buying them again. And both my cashmere jumpers have shrunk on the first wash, despite following the washing instructions! Both of these items have had similar reviews on the M&S website.
    A retailer on the decline, methinks.

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  25. I have been having a similar problem with sending presents to Canada for my son and grandchildren . I first thought I could get the VAT back and was told the same story and and the discovered as the goods arrived that they were subject to huge charges for each parcel and also tax and duties for importation , all of which added 70% to the cost of the goods.
    M&S does not make much effort in reducing these costs by packing all in one parcel , therefore each parcel attracts a charge as well as the tax and duties relevant to the value of goods inside.

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  26. Richard. I have had the same issue and have gone around and around with m&s on this issue and cannot get a straight answer from them. I feel they are breaking the law by charging vat and want to take this further. Do you think the BBC would be interested in this practice? I have some very interesting correspondence in one email which I received which I would love to share with everyone if I knew how.
    Diane.

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    1. I don't think M&S did anything illegal in my case they just made 20%/extra profit from me as an overseas customer (they didn't reduce their price as the VAT wasn't due and kept it as extra profit rather than paying it to HMRC).

      A progran like Watchdog would probably be the most interested if you wanted to contact the BBC?

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    2. I have just written to HM Customs to ask if M&S should be charging VAT. According to the VAT page on the UK>GOV site they should not be. VAT on exports to non-EU countries

      VAT is a tax on goods used in the EU, so if goods are exported outside the EU, VAT isn’t charged. You can zero-rate the sale, provided you get and keep evidence of the export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence, within three months from the time of sale. This can be longer for goods that need processing before export and for thoroughbred racehorses.

      The time of sale is the earlier of:

      the day you send the goods to your customer
      the day you receive full payment for them

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    3. From my reading of the HMRC rules M&S should not be charging VAT on orders delivered outside of the EU. According to the small print on their website (when I last checked) and the customer services representative I spoke to at the time they aren't charging VAT on orders outside of the EU.

      Using a simplified example of what happened to me:
      - I bought some socks for £12
      - A UK customer would have paid £10 for the socks and £2 VAT making the total of £12
      - As an international customer I paid £12 for the socks and (correctly) nothing was passed to HMRC for the VAT
      - M&S makes an extra £2 on an international customer compared to a UK customer.

      Now most companies would charge their international customers the same £10 that they charge their UK customers. However, M&S choose not to do this and charge the higher price. I don't understand why they do this, but it isn't illegal.

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  27. Interesting comments here - Marks and Spencer now have a dedicated Swiss site, and no they still don't remove VAT!

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