The website www.ironhorsehouse.co.uk, promoted software add-ons for a train simulator game. The price for each product was listed as a particular amount "+ VAT".
The complainant challenged whether the price claims were misleading, because they were exclusive of VAT.
Iron Horse House (IHH) stated that they were not a UK registered company and that the point of sale was in California. They therefore did not consider that the claims made on their website were within the ASA's remit.
In addition, they asserted that it was impossible for the website to be misleading as every price claim was immediately qualified with text stating that VAT applied to the price. They said that text was clearly displayed and given equal prominence to the quoted prices. In addition, they stated that approximately 30% of their sales were made to customers who did not pay VAT, and therefore if the price claim was inclusive of VAT then those consumers would be misled.
The ASA acknowledged Iron Horse House's belief that their website was not within the ASA's remit as they were not a UK based company. We noted, however, that the website's URL had the top-level domain ".uk", that all the prices were given in sterling, and that the e-mail addresses provided to enable consumers to contact IHH all ended ".co.uk". We therefore considered that the website originated in the UK and fell within the ASA's remit.
We noted that the CAP Code made clear that VAT exclusive prices could be given only if all customers to whom the price claim was addressed paid no VAT or could recover the cost of VAT. We understood that all the price claims on the site were quoted exclusive of VAT but that approximately 70% of the site's customers paid VAT on their purchases. We therefore considered that the price claims were not clearly addressed to consumers who did not have to pay VAT and that the site should have displayed VAT-inclusive prices with at least equal prominence to the stated prices.
Because VAT was not included in the stated prices, and because the majority of Iron Horse House's customers would have to pay VAT, we concluded that the price claims were misleading.
The claims breached CAP Code (Edition 12) rules
Marketing communications must not materially mislead or be likely to do so.
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means. (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).
The claims must not appear again in their current form. We told Iron Horse House to ensure that, unless their price claims were clearly addressed to consumers who paid no VAT or could recover VAT, they displayed VAT-inclusive prices.