Ad description
Claims on www.printerland.co.uk, seen in July 2015, promoted printing products. Prices on the home page were presented exclusive of VAT, for example, "Only £196.00 ex VAT" and “From £262.49 ex VAT”. On a product page for a laser printer, large red text stated, "Price after cashback: £162.97", with smaller black text alongside stating "ex VAT". Smaller grey text on a light grey background stated "£195.20 inc VAT". Underneath, black text stated the price before cashback as, "Only £196.00 ex VAT", with smaller grey text again underneath, which stated "£235.20 inc VAT".
Issue
The complainant challenged whether the VAT-exclusive prices were misleading.
Response
Computer Risk Management Ltd said their prime focus was to sell directly to business consumers, with the majority of their sales falling into that bracket. That was the leading factor in their decision to advertise their products using the ex-VAT price. They said all of their products were subject to the same amount of VAT at the standard rate of 20%, but that they would amend the ads so they stated the rate of VAT.
They said they understood the concerns, particularly around the pricing displayed where cashback promotions were also displayed, and that the calculations could be confusing. They included the price inclusive of VAT to aid consumers' understanding.
Assessment
Upheld
The CAP Code stated that quoted prices must include non-optional taxes, duties, fees and charges that applied to all or most buyers. However, VAT-exclusive prices could be given if all those to whom the price claim was clearly addressed paid no VAT or could recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.
The ASA noted that the only price claims given on the home page were exclusive of VAT. However, we understood that the website was likely to be visited by both consumers and businesses, and considered the prices that applied to consumers, inclusive of all taxes, should therefore have been given. We would also expect any prices quoted which were exclusive of VAT to be clearly addressed to business customers and to be accompanied by a prominent statement of the rate or amount of VAT payable, neither of which was the case. Given the above, we considered that the presentation of prices on the home page breached the Code.
We also noted that of the four prices on the product page, the most prominent was the VAT-exclusive “price after cashback”. Given that it was significantly more prominent than the VAT-inclusive prices, we considered that consumers were likely to understand that that was the price they would be able to achieve, whereas that was not the case.
In addition, while the prices were labelled as “ex VAT” and “inc VAT”, we considered that was not sufficient to make clear to whom each claim was addressed, and in particular that it did not constitute the VAT-exclusive price being clearly addressed to business customers. We were also concerned that, when VAT-exclusive prices were displayed, the prices were again not accompanied by a prominent statement of the amount or rate of VAT payable, as required by the Code.
For the reasons given, we concluded that the presentation of the prices was misleading.
The ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising) and 3.18 3.18 Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable. (Prices).
Action
The ad must not appear again in its current form. We told Computer Risk Management Ltd to ensure that, where an ad was directed at both consumers and businesses, the price inclusive of all taxes was given, with sufficient prominence to avoid misleading. In addition, we told them to ensure VAT-exclusive prices were clearly addressed to those who paid no VAT or could recover VAT, and that they were accompanied by a prominent statement of the amount or rate of VAT payable.
