Mitsubishi, Trading Standards and the BACC all thought you could quote VAT exclusive prices when advertising commercial vans on TV. But when a complaint was made to the ASA, what did they think? Closing prices at
Where: The Advertising Standards Authority
When: February 2005
A TV ad for Mitsubishi cars quoted a price of "£16,999 OTR + VAT" in respect of its L200 range.
The complaint was that it was wrong to quote prices exclusive of VAT in advertisements in a medium likely to be seen primarily by the general public.
In its defence, Mitsubishi said it had been told by Trading Standards Officers that where most customers were business customers, it was acceptable to quote prices exclusive of VAT. In the case of the L200, the agency responsible said that 75% of sales in 2004 had been to businesses and that the L200 was classified as a commercial vehicle and was portrayed in the ad in a work or business environment.
TV ads? "VAT inclusive" is the default
That advice is all very well, but note para 184.108.40.206(a) of the (Broadcast) TV Advertising Standards Code. It states that TV advertising is regarded as generally being a business to consumer medium and that advertising quoting only VATexclusive prices would be acceptable only in exceptional circumstances.
In this case the ad had been shown on channels aimed at the general public and there was not in the ASA's view any indication that it was targeting business customers.
Accordingly the complaint was upheld and Mitsubishi was required not to show the ad again in that form.
Why this matters:
It is perhaps surprising that so long since the introduction of VAT and the rules which resulted in the "complaint upheld" finding here, advertisers are still going wrong on this fundamental pricing point. It has to be a default position for all broadcast advertising for cars that VAT inclusive prices are quoted.
It is also worth bearing in mind here another source of legislation in relation to the quoting of prices inclusive of VAT. This is the Price Marking Order 1999. This stipulates that where a trader indicates that any product is or may be for sale to a consumer, he must indicate the selling price in a way that is "unambiguous, easily identifiable and clearly legible and placed in proximity to the products to which it relates". The selling price is defined in the order as the price "including VAT" but this particular law does not apply here.
This is because the rules were principally intended for products on display in retail outlets.