Press releases

TSI warns consumers about VAT increase scams

With the increase in VAT taking effect in January 2011, the Trading Standards Institute (TSI) is advising consumers to be wary of companies advertising ‘pay now and save on the VAT increase’.

It might seem tempting to go for the money-saving option but before consumers hand their money over, TSI is advising them to protect themselves by carrying out checks to ensure they are not getting involved in a potential scam, a company that could go bust, or finding that they are burdened with the VAT increase at the end.

They can protect themselves by carrying out research on any trader offering deals such as this, particularly if they are advertising on the internet. If consumers do decide to pay now, then TSI would also advise them to pay using a credit card if the goods or service cost more than £100, as this means the credit card provider shares liability if the trader fails to fulfil the contract.

Consumers are also advised that:

  • if they pay the full amount for a product or service before 4 January 2011, then they will be charged VAT at 17.5%
  • if they pay a deposit before 4 January 2011, and then the balance after that date, then they will be charged the 17.5% on the deposit but the 20% VAT on the balance

However, if consumers pay the full amount in advance, they run the risk of the trader disappearing with their money and not providing them with the goods or services they ordered or they could go bust between the time of order and the agreed delivery date.

Martin Fisher, TSI’s lead officer for pricing, said: “Remember that the VAT increase is only about 2p in the pound. A shop that is holding off charging the VAT isn’t necessarily the cheapest. You can probably find much bigger savings if you take time to shop around.”