Distance Selling Regulations : definition of a business customer

[Justin Smith]

We`ve all got our own views on the Distance Selling Regulations but, as far as I`m aware they do not apply to business to business sales. Now that might sound simple enough but in actual fact it isn`t because loads of small businesses actually work from home, i.e. a residential address. We know this to our cost because TNT charges a Residential Supplement and many of our orders which are actually to a business attracts that supplement !
For instance, if we were to send an order to :

Mr A N Other
"ANO Electrics"
123 Queens Park Rd
Aldershot

Would that be a business to business transaction ?
One interesting aside is that it`s not unknown for a customer to want his business name "on the invoice" so he can put it through his books (often it`s a tax fiddle, let`s be honest.....), so does that then count as a business to business sale ?

 

[finleydesign]

Yes you're right, if you are invoicing a business name and address then yes it a business transaction

 

[Justin Smith]

Yes you're right, if you are invoicing a business name and address then yes it a business transaction

But what if it`s a business name (or the customer asks for a business name to be "put on the invoice") but delivered to a residential address ?

 

[finleydesign]

Hmm at the end of the day the address as such is irrelevant are you selling to Mr Joe Blogs or are you supplying ABC Limited

If you are invoicing ABC Limited than as far as I am aware this then becomes a B2B transaction

 

[Justin Smith]

I`ve just been on to RETRA (we`re members) and their legal chap said if the customer asks for his business name to appear on the invoice then that is a business to business sale and is therefore not covered by the Distance Selling Regulations. Obviously if it`s a non business customer who just wants the stuff sent to his workplace that`d be a different matter.

It does get a bit complicated if the name that the invoice is made out to is "AN Other" and the business name "ANO Electrics" appears as the first line of the address ! I personally think it shouldn`t make any difference, but if there`s one thing about the law I know, it can be an ass......

 

[finleydesign]

That's exactly as I thought it was, if you invoice a business it's a B2B but I understand it kind of has to be the first line, which is tricky as you can sell to a business where someone puts their own name or as you say sell to an individual who gets it delivered to a business address

Where's the difference?

 

[Justin Smith]

That's exactly as I thought it was, if you invoice a business it's a B2B but I understand it kind of has to be the first line, which is tricky as you can sell to a business where someone puts their own name or as you say sell to an individual who gets it delivered to a business address

Where's the difference?

It get`s even more ridiculous because if it`s sole trader it doesn`t actually make any difference (legally) whether it`s the person or the business, it`s the same thing isn`t it ?
This is all a bit theoretical actually because we get hardly anyone phoning us up banging on about the DSRs, and I think it`d be even less likely if they were a business but trying to say they weren`t so as to be covered by the DSRs.

 

[finleydesign]

Yeh but I think you have to use your own discretion, if they invoice to Joe Bloggs t/a ABC than I would class that as a business purchase

However, the recommendation is to expand on your terms, define what you would class as a Business transaction

As you say see how things go, we have advised to be cautious around large expensive orders on one of our self managed website, it was only when they sent a pro-forma request that to me it became a B2B order, so was happier to supply without the risk

 

[Raw Rob]

The first question is "Do the DSR apply if the purchaser is a sole trader?" If they do then the answer to your question simply becomes: if the invoice is made out to a Ltd or PLC then it is B2B otherwise B2C.

 

[Justin Smith]

The first question is "Do the DSR apply if the purchaser is a sole trader?" If they do then the answer to your question simply becomes: if the invoice is made out to a Ltd or PLC then it is B2B otherwise B2C.

Gordon Bennet, if there`s any possibility that the DSRs don`t apply to a business if it`s a sole trader it really does mean the DSRs are a joke. RETRA`s legal guy didn`t say anything about a distinction between sole traders and limited companies / PLCs.

 

[wayzgoose]

It's always work checking the payment aswell. Whether it's Paypal or by card you can see how the customer has registered.

 

[Raw Rob]

It's always work checking the payment aswell. Whether it's Paypal or by card you can see how the customer has registered.

But would that say anything legally? Some people purchase things for their business with a personal card and get the company name on the invoice, I assume this would be classed as B2B

 

[wayzgoose]

Probably not but it's just another check.

 

[Justin Smith]

But would that say anything legally? Some people purchase things for their business with a personal card and get the company name on the invoice, I assume this would be classed as B2B

That happens frequently with us.

 

[IanG]

My understanding is that its not a case of defining what constitutes a business. The reg itself sidesteps the distinction (and therefore the Ltd/ST debate) because it instead defines a consumer:

“consumer” means any natural person who, in contracts to which these Regulations apply, is acting for purposes which are outside his business

Now obviously you'd struggle on the above if the item in question was clearly intended to be re-sold, or indeed used in the course of business. Or was going on a tax return.

Personally I've never found it difficult to decide, you can tell who is trading and who isn't without too much investigation. Although I sell on Ebay so my opinion doesn't count for much anyway!

 

[SHogan]

Hello, Can anyone tell me if as a Sole Trader I am protected by DSRs? I paid for a web service on Friday, they quoted the price ex VAT then when it came through it was 20% higher. On top of this I have since read shocking reviews and rang them today to tell them I wanted to cancel, I quoted DSRs but they said they don't apply as it's a 'business to business' transaction. Are they right, have I got any ground to stand on?? Thanks in anticipation!

 

[IanG]

Was it a business purchase?

 

[SHogan]

Yes

 

[finleydesign]

Yes

The website service is not a physical product, I understand downloads etc are covered but not sure you will find website design service is covered

Also if you purchased this as a business then yes you are not subject to DSR, also under these circumstances the service is only for businesses, as joe public wouldn't be buying a website, the service is always aimed at a business either sole trader or Ltd company

Who was it? with such small notice are they saying why they won't let you cancel?

 

[SHogan]

Hi, Sorry I wasn't v clear earlier, it is for a premium directory service with Scoot, or web.com. I was persuaded to buy a premium listing for £80 on Friday plus £20 a month. When the payment receipt came through it was for £96 (80 + VAT) and monthly at £24. This wasn't mentioned at the time and I wouldn't have done it for that much, I have also since read loads of negative reviews about their listings anyway. Phoned up today and was told there is no cooling off period or right to cancel. They are reviewing the phone call made to me to see if VAT was mentioned (I'm sure it wasn't) but I'm not overly hopeful of them cancelling and refunding me. There is nothing in the Ts and Cs about cancelling, and this was only sent to me after the payment was taken anyway. Any thoughts?

 

[GraemeL]

Have a look a this regarding the creation of a contract.

 

[Karimbo]

Whenevr I get a call from yell I enthusaistically forward them to our purchasing manager:

 

[Vadym Gurevych]

Hi, Sorry I wasn't v clear earlier, it is for a premium directory service with Scoot, or web.com. I was persuaded to buy a premium listing for £80 on Friday plus £20 a month. When the payment receipt came through it was for £96 (80 + VAT) and monthly at £24. This wasn't mentioned at the time and I wouldn't have done it for that much, I have also since read loads of negative reviews about their listings anyway. Phoned up today and was told there is no cooling off period or right to cancel. They are reviewing the phone call made to me to see if VAT was mentioned (I'm sure it wasn't) but I'm not overly hopeful of them cancelling and refunding me. There is nothing in the Ts and Cs about cancelling, and this was only sent to me after the payment was taken anyway. Any thoughts?

Prices quoted to business clients are indeed often quoted ex of VAT. However, naturally, before you make a purchase (online or over the phone) you are entitled to hear the total payable, and that should be including of all the taxes (VAT).

If this was not the case, they are doing something wrong. And so you could report them to Trading Standards (they claim to be registered in Stockton-on-Tees, so Google that + Trading Standards).

However if VAT was somehow mentioned during your telephone conversation - I believe there's not much you can do.

 

[IanG]

Nothing in DSR to help you here.

Probably want to find some legislation relating to unfair terms of the contract as you were not told the proper price.

ASA guidance states that VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate but again, this is geared towards consumers. Not sure you'll find equivalent protection for a business purchase

https://www.asa.org.uk/Rulings/Adju...ItemId={227C9440-DBB1-485B-8537-3053DDCE3B41}

As an aside and probably small comfort but this is a valuable lesson in business - always ask - its very common that you will be told ex-VAT even on stuff where VAT doesn't always have to be paid. I had a thread a while back about unit rent in which the landlord was planning to charge it even though I'm not registered - that mistake would have run in to thousands so £4 on every £20 doesn't seem a high price for such a good lesson.

 

[Karimbo]

As an aside and probably small comfort but this is a valuable lesson in business - always ask - its very common that you will be told ex-VAT even on stuff where VAT doesn't always have to be paid. I had a thread a while back about unit rent in which the landlord was planning to charge it even though I'm not registered - that mistake would have run in to thousands so £4 on every £20 doesn't seem a high price for such a good lesson.

It's a mildly expensive lesson for OP. As a business you're expected to have much higher legal foresight and you cannot rely on end user friendly laws such as consumer law, DSR, consumer credit act etc to help you. They are only design for business to consumer transactions, not for b2b.

b2b is a bit dog eat dog when it comes to contract.

I think trying to get out of this under VAT non-disclosure is a bit far reaching. For a VAT registered business it doesn't matter at all, but for a non-vat registered business you always need to ask is it ex vat or inc vat when being quoted prices.