Morality Question
Discussion
Think of it this way. If she drops her prices now, fine, all her customers are happy with the lower prices. What happens if they start ordering more or she gets new business and sales start to increase? In a couple of years time she might go over the threshold again and all of a sudden will need to up her prices again to allow for VAT.
By then everyone will have forgotten about the previous price drop, and will focus on the fact that all of sudden prices have gone up 20% (or whatever the rate is by then).
Keep the prices as is offers other benefits as well, she'll be better placed to absorb price increases from her suppliers rather than pass on to customers.
By then everyone will have forgotten about the previous price drop, and will focus on the fact that all of sudden prices have gone up 20% (or whatever the rate is by then).
Keep the prices as is offers other benefits as well, she'll be better placed to absorb price increases from her suppliers rather than pass on to customers.
Dixy said:
If she is no longer VAT registered she wont be able to claim VAT back either so the whole business model changes. Business is just about doing sums and deciding if it works for the business.
This.At the moment she buys something for 50p excl VAT.
Charges her customers £1 including 20p VAT.
So she makes a profit of 30p.
When she de-registers, if she reduces her prices then the following will occur:
Buys item for 60p including VAT.
Sells item for 80p (Old price less the VAT charge).
She now makes a profit of 20p.
So if she leaves the prices as they are, then this occurs:
Buys item for 60p including VAT.
Sells items for £1 with zero VAT.
Make a profit of 40p.
So it's not a moral question at all. It's a question of does she want to make less profit or more profit?
I really cannot see any moral issue here.
If she was making a profit, she will make more by deregistering for VAT. The customer is not necessarily VAT registered so won't be able to claim back the VAT anyway.
If I am VAT registered and I sell an ice cream for £2.40, I have to pay 40p VAT before any profits. If my competitor is also selling ice cream for £2.40 but isn't VAT registered, they are making 40p more profit than me.
Should my competitor come over to my business and offer to give me some of that 40p?
I think the OP is at the Marxist school of business studies.
If she was making a profit, she will make more by deregistering for VAT. The customer is not necessarily VAT registered so won't be able to claim back the VAT anyway.
If I am VAT registered and I sell an ice cream for £2.40, I have to pay 40p VAT before any profits. If my competitor is also selling ice cream for £2.40 but isn't VAT registered, they are making 40p more profit than me.
Should my competitor come over to my business and offer to give me some of that 40p?
I think the OP is at the Marxist school of business studies.
If you buy a new car, the price includes VAT, and you can't claim it back.
If the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, woupd you question their morals? Of course you would.
If the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, woupd you question their morals? Of course you would.
Doofus said:
If you buy a new car, the price includes VAT, and you can't claim it back.
If the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, would you question their morals? Of course you would.
But market forces would mean that there wouldn't be an immediate 20% drop. You would find some manufacturers dropping a few hundred pound to undercut competitors i..e small boxy runaround from Company A vs from Company B.If the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, would you question their morals? Of course you would.
Overtime prices for cars would find a new equilibrium depending on the market price each make/model could stand.
Doofus said:
If you buy a new car, the price includes VAT, and you can't claim it back.
If the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, woupd you question their morals? Of course you would.
Only if you knowIf the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, woupd you question their morals? Of course you would.
The scope of the question here is NOT just your friend and her customers; it has to be about the entire market in which they operate, and the moral question is really one of whether or not the market is fair. Do customers know how much they are being asked to pay? Do they know what goods they are going to receive? Is their fair competition in the market?
I don't see any moral dilemma at all btwn your friend and her customers. She offers them known goods at a known price. The customer is free to accept or reject that offer.
The moral question is really about fair competition between your friend and other retailers. Would it be fair for your friend to undercut the competition at no cost to herself by taking advantage of a tax advantage (if it actually exists)?
I don't see any moral dilemma at all btwn your friend and her customers. She offers them known goods at a known price. The customer is free to accept or reject that offer.
The moral question is really about fair competition between your friend and other retailers. Would it be fair for your friend to undercut the competition at no cost to herself by taking advantage of a tax advantage (if it actually exists)?
Doofus said:
If you buy a new car, the price includes VAT, and you can't claim it back.
If the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, woupd you question their morals? Of course you would.
Flip it round the other way Doofus.....If the government said that, in order to stimulate the new car market, it was abolishing VAT on new cars, would you expect the list price to fall? Of course you would. If the manufacturer chose to keep the same list price, woupd you question their morals? Of course you would.
Let's say you want to sell your car but it needs some work doing to it which you've been quoted £500 for. In its current state, second hand value is quoted at £2k but once the work is done, you could ask £3k so you stick it in Auto Trader at £3k on the basis that it's booked in for the work.
Someone calls, says it's exactly what they need. Offers you £2.9k and you accept. You say the car will be ready in a few days when the work is done.
When you pick it up from the garage, they say that they didn't need to do as much as they thought and the bill is only £200.
When the chap comes to get the car, do you:
a) Take his £2.9k, hand over the keys and bid him happy motoring, or
b) Take his £2.9k, hand over the keys and £300 and bid him happy motoring
In relation to your friend, the other thing to consider is what if circumstances change that requires her to register for VAT again in the future? She would then be faced with either having to put her prices back up after a period of customers getting used to the lower price, or reduce her margin. Either option would adversely affect her business.
Dixy said:
Doofus said:
I know
I don't think you doAnyway, I have got the answer to my hypothetical question, and I can't be arsed to argue the definition of the word 'morality' any longer, so feel free to talk amongst yourselves.
deckster said:
Doofus said:
Thales said:
This isn't a question of morals.
I don't agree.jammy-git said:
Far too many people seem to think it is immoral to make profit and very immoral to make lots of profit. I firmly believe one of the biggest causes of businesses failing is because the owner doesn't feel comfortable with charging enough to make a suitable profit.
Absolutely this. Make as much as you can as often as you can for as long as you can.Gassing Station | Business | Top of Page | What's New | My Stuff