NCL Getaway "Food and Beverage port tax??"

[hawkeyetlse]

How does this tax work?

 

a) Selling price = ( menu price + gratuity) x VAT

 

or

 

b) Selling price = ( menu price + VAT) x gratuity.

What gratuity are you referring to? Optional tips, gratuities, and service charges are outside the scope of VAT.

For those who suggest that I am concerned over $1.40, it appears that there is a lot more (NCL Revenue) in this than at first glance.

Could you tell us where else you were charged VAT ("port tax") on board, other than the coffee bar? Did you in fact dine in a specialty restaurant or make purchases in the gift shop?

[hawkeyetlse]

Optional tips, gratuities, and service charges are outside the scope of VAT.

As for the 15% gratuity that is automatically added to all bar purchases, it certainly isn't optional in any practical sense, but maybe if you go to the front desk and yell at them for long enough they will refund it. In any case, in oldsilverfox's coffee example, the formula was neither (a) nor (b), but:

© selling price = menu price + menu price × (VAT + gratuity)

$9.45 = $7.00 + $7.00 × (20% + 15%)

In other words, VAT was not applied to the gratuity, and the gratuity was not applied to the VAT. Both applied only to the posted base price.

[goose30]

All this for $1.40. You should have stayed home.

[oldsilverfox]

Hi Hawkeyetise,

Here we go.

 

When you purchase a drink onboard most cruise lines levy a 15% surcharge as a gratuity. There is no opportunity to opt-out of this.

 

I am no expert on VAT but either NCL has then added a further VAT percent on top of this (cost + 15%) which means they are also charging VAT on the gratuity, OR they are charging VAT on the drink, and then adding a further 15% by way of the gratuity. Which do you think it is ??

 

I did not dine in any of the premium restaurants but throughout the gift shops etc, there were prominent notices displayed saying that 25% VAT (????) would be added to the ticket prices of all of the items, at the point of purchase. (I must admit I thought that UK VAT was 20%.) They weren't selling booze or cigarettes although the shop was open !!

 

Given the already premium pricing of onboard merchandise, as you can imagine, they weren't doing a great deal of business. Also as a point of interest some items, e.g. children's clothes, are not subject to VAT.

 

I now believe that the travel industry mags are reporting on this.

[oldsilverfox]

All this for $1.40. You should have stayed home.

 

If I thought I was going to pay $9.45 for two ordinary coffees in paper cups I probably would have !!

[david_sobe]

No taxation without representation

:)

[oldsilverfox]

Hawkeyetise.

 

Nope.

 

I have just had a look at the HMRC website pertains to VAT in Restaurants, bars etc.

 

It clearly states that if the customer FREELY gives a tip in a restaurant, that tip is not subject to VAT. Since the tills onboard are programmed to automatically add a 15% gratuity, in my opinion it is not freely given and therefore must be subject to VAT.

[Froggitt]

throughout the gift shops etc, there were prominent notices displayed saying that 25% VAT (????) would be added to the ticket prices of all of the items, at the point of purchase. (I must admit I thought that UK VAT was 20%.)

 

I refer again to UK legislation

Prices advertised to the public in ordinary retail shops include VAT. No tax will be added to the price when you pay. This is a legal requirement.

 

So, if NCL feed the need to charge VAT, why do they not feel the need to apply the corresponding regulations?

 

And charging 25% VAT is TOTALLY BIZARRE and contrary to UK legislation

http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm

 

It feels to me like amateurs are making up the "VAT policy" on the fly. I used to work in the UK business of a US corporation, and the US guys just didn't get VAT.......they couldn't understand how it would be included in the retail price, and none of their systems could cope with VAT (and all its foibles such as kids clothing, hot/cold food etc) without significant effort.

[Froggitt]

I now believe that the travel industry mags are reporting on this.

 

Linky link please?

[hawkeyetlse]

I am no expert on VAT but either NCL has then added a further VAT percent on top of this (cost + 15%) which means they are also charging VAT on the gratuity, OR they are charging VAT on the drink, and then adding a further 15% by way of the gratuity. Which do you think it is ??

Neither, as I added above (based on your initial example). On the other hand, it is common practice in the UK, given VAT-inclusive pricing, to apply service charges to the VAT. In restaurants, for example. So you came out a bit ahead on board Getaway :rolleyes:

All this for $1.40. You should have stayed home.

I don't see anything wrong with asking for a full explanation of additional charges. Anytime a customer ends up paying more than the posted price, they have a right to know exactly why. I wouldn't have approached the matter in the same way as the OP or some other posters (who immediately assumed that the charge was an error, or even illegal), but I'm glad it was brought up for discussion here.

[SteveH2508]

Hi Hawkeyetise,

Here we go.

 

When you purchase a drink onboard most cruise lines levy a 15% surcharge as a gratuity. There is no opportunity to opt-out of this.

 

I am no expert on VAT but either NCL has then added a further VAT percent on top of this (cost + 15%) which means they are also charging VAT on the gratuity, OR they are charging VAT on the drink, and then adding a further 15% by way of the gratuity. Which do you think it is ??

 

 

Neither.

2x$3.50 = $7 (base price for the coffees)

15% of $7 = $1.05 (Gratuity)

20% of $7 = $1.40 (VAT)

Total paid = $9.45

The 15% gratuity (applied to the base price) goes to the staff; the 20% VAT goes to the Government; both percentages are applied to the base price.

[pjfromuk]

Don't knock the man for bringing up the question of port charges. I had 4 friends on Getaway and paid in excess of $ 57 port charges on my drink bill. 57 or 570 the principle is the same !!is it right to add this without prior warning ? and good luck to oldsilverfox for bringing it up.

[SteveH2508]

As a matter of accuracy the signs in the shops said "25% TAX" - they did not say "25% VAT". Semantics I know, but I wondered at the time (I suspect they may be signs that they have for another time or place and felt that for 1 night it was not worth doing new signs) - (but then I would never buy that overpriced cr*p anyway!)

 

This VAT fiasco has been going on for years on some of the Mediterranean itineraries - most ex-UK sailings try to call at a non-EU port to avoid precisely these problems.

[Froggitt]

As a matter of accuracy the signs in the shops said "25% TAX" - they did not say "25% VAT".

 

I wonder

a) if they actually charged 20% or 25% of "generic tax" in the shops

b) who they intend to remit the "generic tax" to

[hawkeyetlse]

It clearly states that if the customer FREELY gives a tip in a restaurant, that tip is not subject to VAT. Since the tills onboard are programmed to automatically add a 15% gratuity, in my opinion it is not freely given and therefore must be subject to VAT.

In that case, I trust that you will be withdrawing your demand for a refund from NCL and sending them a check for 21¢ instead? :p

I refer again to UK legislation

I wish you would stop quoting this text without being absolutely sure that it applies to this Getaway cruise. I imagine that in an "ordinary retail shop" in the UK you also can't advertise all your prices only in US dollars, and you have to accept cash payment in UK banknotes and coins, etc. etc. Does it not seem possible to you that the bars and shops on board Getaway might be "extraordinary" for legal purposes and that UK laws applied somewhat differently during this exceptional cruise?

[Froggitt]

the 20% VAT goes to the Government;

 

Another interesting point....on a cruise that visits multiple EU countries, assuming they do have the ability to produce a VAT invoice, would they split out the VAT amount/rate by country, along with the VAT registration number for each country?

[Froggitt]

I imagine that in an "ordinary retail shop" in the UK you also can't advertise all your prices only in US dollars, and you have to accept cash payment in UK banknotes and coins, etc. etc.

 

Actually you can quote prices an take money in any currency.

[KeithJenner]

The 25% in the shops was stated as 20% VAT and 5% import tax. It was quite clear to me in the shops.

 

The VAT wasn't charged on the service charge, as demonstrated above, and we also weren't charged on our restaurant bill as we prepaid it. I expect we would have paid the tax if we had not prepaid, which was the main reason we did so.

 

 

Sent from my iPad using Tapatalk

[Froggitt]

The 25% in the shops was stated as 20% VAT and 5% import tax. It was quite clear to me in the shops.

 

It gets stranger and stranger. What is Import Tax, and who is it being remitted to? It's not a UK tax as far as I'm aware.

 

Is it a lazy way of saying customs duty? What about each person's duty free allowance (£300+ from memory for outside the EU) that would negate any tax due on a few poxy gifts....and unlimited (from memory) from any EU country.

Edited January 16, 2014 by Froggitt

[hawkeyetlse]

Actually you can quote prices […] in any currency.

Only in addition to, and not to the exclusion of, sterling (Price Marking Order 2004 §6).

[Froggitt]

:D

 

Looks like another contravention theyre going down for!!!

[hawkeyetlse]

Maybe you're right, and they were breaking all sorts of laws. Either unwittingly, or knowing that there would be no consequences. There would have been consequences, however, if they had returned to Southampton having collected no VAT during the cruise, so obviously they chose to obey that law. I don't think one can make a serious argument that because they failed to print up special VAT-inclusive price lists in sterling just for these two mini-cruises, passengers are entitled to a VAT refund.

[Froggitt]

Maybe you're right, and they were breaking all sorts of laws.

I guess neither of us know if they have exemptions from HMRC for all those possible transgressions. Six or seven without trawling back thru this thread!!!

Either unwittingly, or knowing that there would be no consequences.

My guess is they don't know what they're doing.

There would have been consequences, however, if they had returned to Southampton having collected no VAT during the cruise, so obviously they chose to obey that law.

Agree. But its easy for them at the top to shout "make sure you collect Brit VAT" but a lot harder if the guys on the ground don't know the rules around collecting VAT and don't have the systems to enable them to do so properly

I don't think one can make a serious argument that because they failed to print up special VAT-inclusive price lists in sterling just for these two mini-cruises, passengers are entitled to a VAT refund.

I tend to agree with you on that - booze is VATtable.

[hawkeyetlse]

But its easy for them at the top to shout "make sure you collect Brit VAT" but a lot harder if the guys on the ground don't know the rules around collecting VAT and don't have the systems to enable them to do so properly

It sounds to me like they did a pretty fine job of collecting extra money from everyone on board! If it turns out that they should have taxed the 15% autograt, I guess they'll just have to pay it themselves. My guess is that they have VAT experts on their payroll and they know exactly what they're doing (or what they're supposed to do).

 

But I don't think NCL does any regular cruises out of the UK, so I don't expect the issue will come up again until they launch another new ship. In the meantime, we can count on Mediterranean cruisers to continue whingeing about the Spanish and Italian IVA. :D

[Froggitt]

My guess is that they have VAT experts on their payroll and they know exactly what they're doing

I don't think so. The UK sales operation sell holidays and its pretty cookie cutter......they know whether holidays and flights are VATtable or not.

 

The US is where the cruise operations are run from. The American accountants will likely have a basic understanding of VAT only......enough to shout "collect Brit VAT".

 

I worked for the UK retail business of a US corporation. The US accountants knew nothing about VAT other than "we think youll need to change the EPOS to deduct US sales tax". The systems changes to cope with VAT across countries were significant, when an item is VAT exempt in UK but basic rate in Spain etc/different rates etc.

 

Showing a VAT invoice with different rates of VAT across different countries, with different products VATtable in different countries and remitting to the proper country......plus inc VAT menus etc. in multiple currencies for each country....would cost NCL millions to do properly.

 

So that's why I think they wing it, and will have a scribe knock up a VAT invoice when requested.......and hope to get away with "5% import tax" rubbish.