Wednesday, 2 February 2011

TESCO and 20% off == VAT-Free shopping

"Thank you for your email in which you ask how much we are deducting at our checkouts as shown on our new Television advert. The standard rate of VAT increased from 17.5 per cent to 20 per cent on 4 January 2011.

For any sales of standard-rated goods or services that Tesco make on or after 4 January 2011  VAT at the 20 per cent rate must be applied. For this reason Tesco 20 per cent off savings mean VAT-Free shopping – whether that's on luxuries like a fashionable jacket or lovely lingerie – or basics to make their lives easier such as laptops. We've got lots of bargains on a range of products – and customers can expect more from us in the coming weeks."

15 comments:

  1. Oh dear - it's really really sad when they display enough knowledge about standard rate (i.e. seem to understand that some items (e.g. most food) are exempt), yet then just claim that 20% off means you've saved the VAT.

    I guess technically they are correct, in that a 20% saving does indeed mean you've saved the VAT, it's just you've saved a bit more as well - perhaps it's worth asking them for an example of a notional item that is £1 excluding VAT and liable to VAT at the standard rate, and to show you the calculations from before and after the discount...

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  2. Indeed. My gripe was originally that they stated that 20% was deducted at the till which is equivalent to the VAT.

    Yes, 20% off is at least as good as VAT-Free shopping.

    I am not convinced they understand though, not from that reply.

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  3. I am 100% convinced that a company as brilliantly successful and well-managed as Tesco is run by people who know how to add and subtract percentages.

    Wisely, they don't bother to spend a lot of money on the people they pay to correspond with pedantic time-wasters.

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  4. So the alternative, that they have gone for, is tell blatant lies to the public (claiming 20% off is the equivalent to VAT off) and make them look like incompetent arseholes.

    That is not, IMHO, money well spent, whatever you think of pedantry.

    They could, so easily, have done marketing that was easy to understand and correct at the same time.

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  5. Just ask them to add 100% to the price and then deduct 100% to put it back to the original. They'll soon work out something is wrong then

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  6. "They could, so easily, have done marketing that was easy to understand and correct at the same time."

    I think perhaps you overestimate your fellow citizen. It would be a monumental task to explain to your average Tesco shopper the subtle difference between removing 20% VAT and discounting by 20%, and why actually deducting only 16.7% is *honestly* the same as removing the 20% VAT.

    It's far, far easier just to apply a slightly bigger discount and refer to it in simple terms. It's not technically right, but all they're ultimately doing is giving a bigger discount than they need to...

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  7. Well, for one they could simply have pitched it as a 20% discount. Simple, clear, no mention of VAT.

    They could have said it was "more than getting the VAT back" without explaining more, if they wanted to mention VAT at all. If they wanted to they could have made it 21% discount and "more than the VAT back" and not been telling porkies or causing extra confusion.

    At the end of the day why mention VAT at all. It is not in fact getting the VAT back. It is not the same as getting the VAT back. It is just a 20% off deal (which is nice). So why confuse the issue at all by mentioning VAT in the first place?

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  8. Just because it's good marketing; people like the idea of paying "no VAT" even though that's never strictly true (even if the maths is right).

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  9. I think Tesco and A&A are both good at marketing in their own ways. Tesco know that people like the idea of paying "no VAT" as Pete Favelle points out. A&A know that sending pedantic emails to Tesco and posting the results on a blog will help to sell Internet service. :-)

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  10. I wouldn't have thought a bloke who typed like you would have risked a word like 'cunning'. Are you considering a career with BBC Current Affairs?

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  11. I have found an advert that says "save 20%" on a no-vat offer, when actually the saving is less. (rather than these examples where the saving is actually more).

    Seat have a "Save 20%" promotion, but they actually just leave off the VAT. Their website somewhat states this, but I have a photo of an advert where they go as far as spelling out all the figures. They say save £2687, but it's actually 16.6% of the final amount, whilst claiming it's a 20% saving.

    Can send it if you want to have a look...

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  12. I'm happy to put a picture here

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  13. This should work (with limited resolution), not sure how to send it to you or submit to the blog directly. Would be interesting to see what they say on the matter, given that now they're actually misleading consumers rather than just feeding them bad maths.

    https://lh6.googleusercontent.com/_IV9RrPGHo2g/TW0VwRFr9sI/AAAAAAAABa4/lr9Lbex7ecI/s800/IMG_20110226_232948.jpg

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