Google Play, UK VAT, and Jersey: A Tale of Incompetence

Google tries to figure out UK VAT, Jersey GST, and what exactly a 'Bailiwick' is. It doesn't end well. Posted 29 January 2013

I‘m one of many who pre-ordered a Nexus 4 Android phone from Google over the holidays. I wasn’t put off by their bungling of the product launch, their absence of communication skills, or disastrous track record going back at least three years, when they tried selling the Nexus One smartphone. “Surely they have worked this out by now” I thought. Well, I was wrong.

It comes down to these two key points:

  • Google insists on charging me UK VAT, a UK-only tax, despite the fact that I am not in the UK. I’m in Jersey, Channel Islands and we don’t pay UK VAT, period. Brazilians don’t pay it, the French don’t pay it, Jersey does not pay it. Simple concept.
  • Nobody in a customer-facing position can fix this simple error. They can’t even explain why they added it to my order in the first place. My billing address in Google Wallet, which I used to pay, is correct. The last line of my address is Jersey, as it should be.

I should say that the people at the Google Play Store are super-polite, and are pretty good at replying to your queries by email. Since they can’t actually fix things, though, it’s become clear that they could be replaced by answering machines that record and then delete your message after a day or two. The human interaction here is superfluous, it accomplishes nothing and seems to be just for show.

The irony here is that Google are notorious tax-dodgers, and are quite proud of this fact. Jersey is an offshore finance centre but we are quite strict about not playing this game, and have strong tax agreements with the UK and other countries to handle this. Maybe Google are sore about it? Maybe it’s just that we are only 100,000 people and they can afford to ignore us. I don’t know.

I still don’t understand why they would insist on charging me the extra tax though. It works out to £48.16 or about $77 US Dollars. I don’t owe it, they don’t pay it to the UK, why collect it? Extra profit? I’m not a lawyer but I have to wonder if that is even legal.

After several emails back-and-forth with very polite people who were keen to learn about the problem, and their explicit promises to deduct or remove the mysterious taxes, they broke their promise and abruptly cancelled the order. All this after waiting for six weeks for the phone! They are no longer replying to emails and have refused to explain themselves. Again, we are only an island of 100K so maybe they are just ignoring us?

Their more successful competitors like Amazon handle this perfectly. Even independent app developers in the Google Play store handle taxes correctly. I don’t know if it is ignorance or incompetence on Google’s part but one thing is very clear. Google, after years of trying to figure out how to sell to the public, still haven’t figured out basic customer-service skills. They are paying polite, competent people to man the telephones and reply to emails, and then they don’t give them the tools to actually fix problems.

The timeline so far is this, and I’ll update this post if Google ever figures out what they want to do:

  • 13 January, I check my pre-order for an estimated ship date, notice the UK VAT error, and call.
  • 14 January, their mystery reply: “After reviewing the documentation you’ve provided, our tax team has determined that because you are located in the United Kingdom according to your shipping address, it will show that VAT tax on his receipt.”
  • Same day, I reply explaining that their shipping address is wrong. Google Wallet has the correct address, simple fix so please just correct it.
  • 15 January, they are “…researching jurisdiction and taxation among the Channel Islands…” and report “…Jersey is distinct from UK territories and is not a part of the UK or the EU on which the VAT tax implies.” A promising start, I am impressed so far.
  • Same day, I write back pointing them to the UK Customs page explicitly stating we don’t pay VAT. They seem to want to solve this and I want to help.
  • Still the 15th, first sign of trouble from them: “As I do not have authority on this, I am consulting this case and will update you as soon as possible.”
  • January 17th, they write “Ok Tom, you are eligible for a tax refund, but we cannot issue a refund because of US laws. So, we can issue you a VAT invoice which you will give to your government to obtain a tax refund.” Hmm, my government is the States of Jersey and they don’t have anything to do with UK VAT. The requested “…exemption certificate supporting the state of where you are making your purchase” isn’t something that exists, no such thing.
  • Same day, I explain the certificate they want isn’t something that even exists, and that the United Kingdom is a completely different country. Again. I might as well write to the Russian government asking for a Chinese tax refund. Kafkaesque.
  • January 18th, a ‘specialist’ writes back, and offers to only charge a 5% tax (the correct tax rate for Jersey) instead of the full 20% UK VAT. Very polite still, probably thinks this is a reasonable solution. Still thinks Jersey has something to do with UK taxes though.
  • Same day, I explain that they are still charging me a 5% tax for the UK, and when the phone arrives in Jersey, Jersey Customs will be charging me 5% tax. They don’t care about UK VAT, again, because we aren’t the UK. Still hammering away at this super-clear, obvious indisputable fact. I think they assume the UK will pay my Jersey taxes. Fat chance.
  • January 19th, their reply: “Thank you for contacting Google about the VAT. I do apologize for the inconvenience. I could see how frustrating that could be. I will do everything I can to assist you. Thanks for the feedback on this VAT Tax situation. We strive to offer the best customer service as possible. We will take this information into consideration to remove the VAT TAX before shipping to the Channel Islands. You will of course be issued your refund in 7 to 14 Business days to the same account you used to purchase.”. I think they have sorted it out now, and wait for my phone to ship.
  • January 21, I get a survey request. I want to complement the good, professional replies I got so far, but I have dealt with too many situations like this before so I save the email survey link and continue to “wait and see”.
  • January 24, “Your purchase from Google Play has been cancelled. Any charges made will be refunded.” No explanation, no follow-up.
  • January 26, I send another email demanding an explanation. I know, it’s futile, but worth a try. Nobody likes to be ignored.

Nothing more yet, and probably won’t be any changes coming. I’ll go back to buying from Amazon, and it’s just too bad that phones like the Nexus line aren’t offered by third-parties in Jersey.

Anyone else try ordering one of these here yet? It might be easier to just do a partial charge-back through your credit card, and not even trust Google to fix the mistake prior to shipping. My bank actually suggested this to me, but Google cancelled prematurely so I’ll never know.