Pressure Mounts on Windows Tax? [Update]

I wonder…

Since I wrote about getting the Windows license fee refunded on my Asus 1008HA netbook here in the UK, there have been more examples where individuals have had some success.

First we had a story on slashdot in the USA that seemed to be inspired by my own:

Today Amazon credited my card with $65.45. After ordering an Eee PC 1005 HA from amazon.com, I asked them for a refund for the cost of Windows XP via the ‘Contact us’ form. At first they told me to cancel any items on my order that I wanted a refund for, but after I explained that XP was pre-installed on the machine they got it. They asked what the cost of the OS was, and I answered that I had no idea but that Amazon UK refunded £40.00. Within a few hours I got a response saying ‘I’ve requested a refund of $65.45 to your Visa card.’

Then we had some tales of difficulty in getting the refund from Amazon and Ebuyer, although I guess they will capitulate in the end as it seems the law is on our side:

If the retailer is awkward, then the way to a refund is avoid the trap of following the instructions in the EULA. Instead you request that the retailer replace the software with a version that isn’t ‘faulty’ (ie doesn’t have the additional terms and conditions imposed). You didn’t agree to them when you purchased the item and therefore they don’t form part of the contract of sale with the retailer.

The Sale and Supply of Goods to Consumers Regulations 2002 requires that the retailer replace the faulty item, or if that is impossible provide you with a refund. The Sale of Goods Act gives you the right to partially reject items. Essentially you assert your ’statutory rights’.

Simos Xenitellis writes about trying to acquire a machine sans Windows Tax. And finds a few locations. I note that the first comment to his post is suggesting he visit our own site http://nakedcomputers.org for more bare-metal suppliers.

It is very difficult to buy a computer without Windows (that is, to buy it with either Linux, FreeDOS or no OS) in the European market.

Why would you want to buy a laptop without pre-installed Windows?

1. Because you are simply not going to use Windows (for example, you plan to use a Linux distribution)
2. Because your school has an Developer Academic Alliance (formerly MSDN AA) with Microsoft and they provide the Windows software for you
3. Because your organisation has a company-wide agreement for Microsoft software, and you do not wish to pay twice for Windows.
4. Because you somehow have a Windows license or Windows package installation box already.

Sadly, when talking to the sales personnel of a manufacturer, it might look an easier strategy to just mention points 2 or 3. There is already some prior knowledge with the sales personnel that large organisations do not need the pre-installed Windows software.

And then we have Venkat Raghavan who has just bought an Asus 1005HA, again from Amazon, inspired by the earlier mentioned Slashdot article, and with not too much trouble has managed to get the Windows Tax refunded:

I’ve been a linux user for quite a while now. I looked to buy a netbook without Windows on it, but due to market conditions, that did not seem possible.

Based on this slashdot article, I went ahead and ordered the same item. (see my report on it here)

The first conversation was over the phone, which did not get me anywhere.

I had better luck over email. They offered me a refund of 10% on the price of the netbook, along with keeping Windows on it.

I however, asked again pointing to the slashdot article and after that they refunded me the price of Windows XP according to the article: $65.45

Thank you amazon for being so awesome!

That’s great. Congratulations on your perseverance and success.

Venkat also describes his experiences installing Ubuntu Netbook Remix and subsequently eeebuntu on his new machine here.

To wrap up this quick post, there is this very interesting news story/rumour about Asus being reported currently, I wonder if the message is finally getting through?

Awesome news from Engadget about the open source future of the next generation of Eee PCs. Their ‘spies’ have uncovered information that the first Moblin-running Eee netbooks will be in stores come October. Asus, the Eee PC manufacturer, is apparently considering making open source OSes an option for all their netbooks in the future.

Please keep up the pressure dear readers. If you buy a computer where you do not “need” a Windows license, for whatever reason (see Simos’ suggestions for 4 of them above) then make sure you contact your supplier and request a refund. By all means use links and reports gathered around the ‘net to support your claim.

Hmmm, I think feel a new website idea brewing….

[Update]

We just received a comment on our “Please Sell us some Laptops” post from Claudio about how he got a refund from Dell in Belgium very easily:

I installed Ubuntu on the machine. Everything worked out of the box (a firmware update was needed to speed up the Intel Wifi) and I was a happy customer. Because I don’t use the pre-installed Windows partition, I sent a polite e-mail to Dell requesting a refund for the license of Microsoft Windows and Works. I just stressed I was a happy customer (I am) and didn’t want to return the laptop. I didn’t accept the EULA and asked for an address to send the Windows restore DVDs.

The answer was fast and professional:

Thank you for contacting Dell online customer service.

We will not be collecting the software CD’s from you, but would arrange for the amount to be refunded back to your account.

Please allow 5-7 business days for the amount to get reflected on your account.

And indeed, a few days later € 96,78 was added to my credit card. That’s what I call a customer service WIN.

Thanks.

Taxing Times for Free Choice [Updated]

It seems, unfortunately, as though my experience with Amazon was not common place.

Neil Wilson left a comment this morning explaining that his request to Amazon did not meet with the same response as my own…

We are not in a position to offer a partial refund for this product. You can of course return the laptop to us for a full refund if you wish

This appears to be in breach of consumer protection law and, more to the point Microsoft’s own EULA which, if you read it, and then decide to not accept it, clearly states:

“If you do not agree to the terms of this EULA, you may not use or copy the SOFTWARE, and you should promptly contact Manufacturer for instructions on return of the unused product(s) for a refund in accordance with Manufacturer’s return policies.”

Some may try and suggest that “product(s)” means the computer in question, but since when have Microsoft started licensing the computer hardware of unknown manufacturers? The EULA is written for the protection of their software, not for some arbitrary computer of which they have little or no knowledge.

Amazon – This is not good. You really do need to do the right thing. I am sure that if you ask Asus, AIUI, or whoever else supplies your computers they will be able to reclaim the License cost from Microsoft and pass it back to you.

Unfortunately, it seems as though Amazon are not the only ones trying to ignore consumers and force us to pay for software we have no need of, nor desire for. Enter Ebuyer (a UK based “stack ’em high, sell em cheap” etailler)…

Here’s a potential customer’s question being answered this morning by Ebuyer’s E-Note system (E-Notes are Ebuyer’s way to avoid having to provide telephone numbers or email address so you can talk to real people)

Dear x,

Thank you for your response.

I have been speaking to the Product Managers for the Software and Laptops and they have both advised that we would not issue a refund on the OS.

You may return the product for a refund if you are within the time period of 28days after purchase but other then that we are not going to be issuing a refund on the OS.

The Product Manager for the laptops has been speaking to the manufacture and they have come back with the below response regarding the matter:

‘It’s a load of rubbish, I don’t know where this rumor has come from J we started getting people asking for it on the EEE PC when we first produced the XP versions.

We get the odd person phoning up saying this to us but no one gives the cost of XP back and I can understand why they think we would.

I’m sorry we cannot help — I have never heard of any manufacture or reseller giving the money back.’

Kind Regards,

y

Ebuyer Customer Support Team

Dear oh dear Ebuyer…

What a very strangely worded response. The internet is quite awash with people who have successfully claimed a refund for the Windows Tax. Please see this page for a consolidated list of many.

Asus, of whom the above message is referring are not doing themselves any favours by locking themselves into only supplying Microsoft’s Operating System. See this public letter regarding one buyer’s thoughts on the subject.

I would also like to bring to the attention of all vendors what the National Consumer Council, here in the UK, thought about EULAs in February 2008.

The National Consumer Council (NCC) has accused 17 firms, including Microsoft, Adobe and Symantec, of using unfair “end user licence agreements” (EULAs).

The NCC has asked the Office of Fair Trading to launch an investigation.

The NCC said the firms’ EULAs were misleading customers into “signing away legal rights”.

The NCC looked at 25 software packages and said that in 17 instances, the packaging did not tell potential buyers they would have to sign an EULA in order to use it.

While some contained the EULA inside an instruction manual, or let it be read online, this was only after the software had been bought.

This means that consumers are unable to make informed decisions before they buy a product, yet are being forced to take on an unknown level of legal responsibility,” said the NCC.

After examining the contents of the EULAs, the NCC also said that some contained potentially unfair clauses.

Unfortunately, on the 1st October 2008 the Welsh, Scottish and National Consumer Councils merged with Postwatch and energywatch to form Consumer Focus. And did they maintain a historical record of the old sites? Not that I could find.

Anyway, it boils down to this:

Forcing people to buy something else with what they really want to buy is called bundling. It is now prohibited in France, and it is probably so in the UK too.

Perhaps these vendors need to read about the Sale of Goods Act again.

Neil Wilson described the situation very succinctly in an earlier comment on the same original post.

It is much better that the retail store pays, because they are the ones that are ultimately the channel to market. The more expensive it is for a retailer to stock Microsoft the better.

If the retailer is awkward, then the way to a refund is avoid the trap of following the instructions in the EULA. Instead you request that the retailer replace the software with a version that isn’t ‘faulty’ (ie doesn’t have the additional terms and conditions imposed). You didn’t agree to them when you purchased the item and therefore they don’t form part of the contract of sale with the retailer.

The Sale and Supply of Goods to Consumers Regulations 2002 requires that the retailer replace the faulty item, or if that is impossible provide you with a refund. The Sale of Goods Act gives you the right to partially reject items. Essentially you assert your ’statutory rights’.

I feel that we need to have a bit of a campaign here… Can I request that all readers of this post, especially in the UK, please pass it on, tell others and if you have the time, please write to your MP to make your opinion heard. It is disgraceful that we should be FORCED to pay for software for which we have no need nor desire. Microsoft seem to have successfully closed down many of the earlier Linux bundled netbooks through downright bribery or co-coercion I assume. It is not right.

This is the 21st century, there are other operating systems available which are superior in almost every way and, even better, are free. Just go and download Ubuntu if you don’t believe me and try it out for a few weeks…

[UPDATE]
Neil left a comment below. But just to make sure it doesn’t get overlooked he wrote:

Can I ask that all readers contact the OFT and request that they investigate the use of bundled software EULAs as an unfair practise under the new Unfair Trading Regulations 2008.

Thanks Neil, I’ll do that shortly. Sounds like a good idea.
[/UPDATE]

NB: There is a small but growing band of niche retailers and vendors who will sell you a computer with no operating system pre-installed. The choice is quite limited and the major manufactures seem incapable of escaping the grasp of Microsoft. But if you care to, do visit Naked Computers to see if there is a vendor that can help you.

Getting your Microsoft Tax Refunded: 10/10 for Amazon UK! [Updated]

Yesterday I received a great prize from the people at Miserware for helping with the Beta trial of their power saving software for Linux computers; a new and very shiny Asus 1008HA netbook PC.

The PC itself looks brilliant and I can’t wait to use it. However, it is unfortunate that Asus seem to have been bought-off by Microsoft so they will no longer sell these devices with anything other than Windows software. Software that I for one have absolutely no intention of using.

Turning the machine on for the first time I was amazed at just how long it took for the first-time-run license window to appear. Anyway, it did eventually:

Windows XP EULA Screen

Windows XP EULA Screen

If you can read the text in the EULA on the left, the important bit states:

“If you do not agree to the terms of this EULA, you may not use or copy the SOFTWARE, and you should promptly contact Manufacturer for instructions on return of the unused product(s) for a refund in accordance with Manufacturer’s return policies.”

Do also take a look at the conditions imposed in the second box too (click the images for a big piccy). Basically it says you can’t change your mind once you have said yes and that they don’t actually provide any “warranty” anyway. What complete and utter claptrap. Why on earth do people continue to put up with this rubbish?

And so, when you say you do not want to accept their unfair and ridiculously one-sided licenses, you are told to turn of the machine. Fine. Suits me.

XP says turn off machine.

XP says turn off machine.

First off I thought I’d ask Amazon what the correct procedure is for requesting a refund. So I sent them an email from my Amazon account last night (at about 10:00pm):

Requesting procedure for license refund

Requesting procedure for license refund

This morning I had one of those slightly annoying automated replies telling me that because the order wasn’t actually to do with my account (which is correct):

“For security reasons, we can only take action on an account when the request comes from the e-mail address related to that account. Hence we request you to contact us from relevant account.”

There were a couple of helpful links in the mail – one of which was to use if you found the email response hadn’t been helpful or resolved your issue. Clicking that took me to a page on Amazon’s site where I was invited to get them to call me. Within 20seconds or so I was talking to a real person (probably in Ireland from his accent). I explained that I didn’t want the Windows XP software and was intending to format the drive and install Linux (he seemed to understand exactly what I was talking about). He asked what version of Windows was on the computer, and then basically said ‘OK. We’ll refund the cost of the license to the buyer’. And that was it.

I should point out that the chap at Amazon also suggested that I check with Asus that removing the software might invalidate my warranty on the device. I have searched on Google and on Asus’ website and read the Warranty card that comes with the device. I couldn’t see anything that would indicate my warranty would be void if I change the software. I have mailed Asus to try and confirm it will be OK. [Update: I’ve just had a message back from Asus saying my Warranty will fine. They don’t “support” other operating systems but I can understand that completely] Frankly, it would be a pretty USELESS warranty for a computer if it became void by installing new software. But I am not a lawyer so don’t take my word for this and YMMV.

Within a minute or so of ending my phone call with Amazon a copy of an email to the Miserware account holder at Amazon dropped into my inbox.

Dear Melissa/ cc Alan

I have requested a refund to your payment card for this purchase in the amount of 40.00 GBP for this order, as Alan will not be using the Windows XP Software. Refunds usually go through within 2 to 3 business days and you will see this amount credited on your next statement…

Brilliant. I can’t really praise Amazon enough for that. It was easy, simple and no fuss.

I guess my only concern is that the cost of this refund might not get passed back to Asus. But at least the information is in the public domain on this blog. Also, I should think if Amazon had to do this more than occasionally they’d be asking some hard questions of Asus…

Now I need your help dear readers…
I am not yet sure what to put on this machine: Ubuntu Desktop, Ubuntu Netbook Remix, Cruchbang (which I have heard some good things about but not tried) or something else… Suggestions are more than welcome 🙂 I have plenty of choice! And I plan to use it!

And finally.

Come on Asus, you have some really nice products crying out for a proper operating system and it’s a real shame you have allowed yourself to be stitched-up by Microsoft. If you would like me to put you in touch with the guy responsible for OEMs at Canonical (Ubuntu) Just let me know. 🙂 I’m sure he’d be delighted to talk to you.

Microsoft Microshaft pays just 0.04% Tax

As if we needed another reason to dislike Microsoft…

Accounts for Microsoft Ireland Research, an Irish subsidiary of the global software giant, show that the company paid just €460,000 in tax, on profits of more than €1.2 billion last year, by using provisions in Irish tax law to take its corporation tax bill down from €158m. Much of Microsoft’s international profits are channelled through Ireland, but because the main company for Microsoft’s activities has unlimited liability, it does not have to file detailed accounts.

That is so totally disgraceful.

And as my partner at The Open Learning Centre just pointed out to me, it almost certainly means that they pay little or no tax whatsoever here in the UK – it all gets channelled through Ireland. So the public money that they steal receive for education etc, has zero tax recovery. I wonder if the National Audit Office would consider this good use of taxpayer’s money?

I’m so glad I have nothing whatsoever nothing to do with them.

Oh yes. And when somebody starts extolling the virtues of Bill’s philanthropy, just remind them of where his money came from.

Microsoft’s Fixed Rate Tax approaches 100%

Yesterday, we decided that we needed to get a new laptop for our business.

Nothing particularly staggering about that you might think. And, on the face of it you’d be spot on. However, as you probably know, our company The Open Learning Centre is focused on delivering business solutions and services based on Open Source technology.

Consequently what I definitely DO NOT WANT is to be forced to buy any Operating System with my hardware. I would like to choose for myself. I might want Ubuntu, or SUSE or Mint or something else. Or, god-forbid (and this is purely for example’s sake) I could choose to install one of the many valid, and already paid for, copies of Windows 95, 98, ME or XP that I have lying around.

So after a great deal of Googling yesterday, I found a grand total of TWO companies here in the UK that publicly offered me the opportunity to buy a new laptop on-line without an operating system.

The only other way is to buy individual components and assemble your own computer. This can end up being more expensive and is certainly not a trivial task, especially with a laptop. I do build my own desktops but wouldn’t consider doing the same for a portable PC.

I did look at Dell’s Ubuntu offerings but the spec of the machines wasn’t quite what I needed and – to be honest – all the “Dell Recommends Windows Vista” and notices about “Beware! This Computer Doesn’t Run Windows” made me feel a bit patronised. I understand to a certain degree the problems Dell face and must address; support and an audience of not-so-techy customers so I am not going to denigrate what they are doing. I just hope in a year or two’s time, I will be able to choose NO operating system on any of their computers.

But to get back to the main thread of this. Just two companies here in the UK that could offer me a laptop which I could choose to have supplied without an Operating System. That is bloody scandalous. EVERY other laptop (apart from the 2 Dell machines and some Asus EEe PCs [Update: I was a bit brief here. There are few other vendors who supply Linux pre-installed. But they do not offer the choice of “no operating system”]) would be supplied with a Microsoft Operating System. I had little or no choice; I could always have bought a Mac but that’s a somewhat similar issue.

Irrespective of the fact that I wouldn’t use their crappy and expensive software anyway, I have plenty of old discs with Microsoft’s operating systems on them that I have legitimately paid for and are not installed on any of my other computers. I’m sure there are many millions more like them. So why must I pay for another copy? This is completely unfair and should be (if it isn’t already) illegal.

The Globalisation Institute submitted a report to the EU commission last September saying just that:

Computers in the European Union should be sold without a bundled operating system, according to this submission to the European Commission. It says that the bundling of Microsoft Windows with computers is not in the public interest, and prevents meaningful competition in the operating system market.

The current situation basically means that for almost every single PC sold around the world, I believe we (you) are paying a TAX to Microsoft. We have already seen how they have done this with our schools. And we have seen Becta’s responses here and here.

I suggest that interested readers write to their MP or MEP, explain about this grievance and ask what the EU is doing about the report above.

On a positive note however, the two companies that did enable me to buy OS free computers deserve to be properly applauded, mentioned here, and please pay them a visit when you are looking for new hardware.

The first is a highly customisable offering from PCSpecialist.co.uk (http://www.pcspecialist.co.uk/). You can build desktops, towers, cubes and laptops to your own specifications and choose your Operating System or not as you wish. Removing the OS saves you anything from about £60 to £120 depending on your other choices.

The second is a more “mainstream” computer business. And was where we decided to buy from in the end as the price/spec was just a bit better for my particular requirements. That company is Novatech (http://www.novatech.co.uk). Yes, Novatech. It looks as though you can choose your operating system (or not as you wish) for any of their PCs. Be they laptops, servers or desktops. They have a good range and probably the best value we found anywhere. Choosing no OS saves you anything between approx. £50 and £300 depending on your choice of hardware.

Up to £300 quid Microsoft TAX… And it’s a fixed penalty too. Your hardware could cost £250 or £2500 – it doesn’t matter to them. Next time you are equipping your business or home with new computers please think about this first. You can have Ubuntu Linux Desktop Edition and/or Server Edition for free. You can copy, re-use, install on as many machines as you wish and they will provide much better performance with no usage restrictions either…

Crowdfunding and VAT

The trendy way to get your investment capital these days is to put together a slick video and shove your concept on Indiegogo or Kickstarter. You offer some gifts/rewards for different pledge levels and set an overall funding target and then sit back as everyone talks about it and does your advertising for you for free. Awesome stuff. It has been used for different types of project, often for bringing a bit of hardware from a prototype into production, and the pledge often includes one of the products – but there is an element of risk to it, some are delayed like the Parallela (which we funded, still waiting for our two boards) and some like The Doom That Came To Atlantic City and Clang appear to take a lot of money and deliver nothing. Some don’t meet the funding target, the most spectacular example of this was the Ubuntu Edge which managed to break the records for the most money pledged and the biggest shortfall at the same time, which is quite a clever trick. I was contemplating backing the Edge, but I certainly didn’t want to put it on my personal credit card, I wanted to put it through as a company expense – it would have been an interesting toy for us to play with. Libertus is a VAT registered company, this means we charge VAT on things we sell to our customers, and we reclaim VAT on stuff we purchase from suppliers – it is a “Value Added” tax not a sales tax. We pay tax on the value we add to the goods in the supply chain. This makes a lot of sense in a products business where you buy raw materials, do some process to them, and sell finished goods, but it also works just fine when we sell services and buy assorted bits and pieces that are not strictly raw materials. The upshot of this is that as a VAT registered business, when we buy pretty much anything, we can reclaim the 20% VAT that our supplier added in the price. So, back to crowdfunding, I asked Canonical if I would get a VAT receipt for the £430 or so that it would cost me for the phone, so I could reclaim the £71.66 VAT (or offset it against my VAT on sales, you don’t actually get money back from HMRC unless something is going very wrong in your business). The answer was no, they don’t issue VAT receipts, which kind of makes sense, sort of. It isn’t a product purchase, it isn’t an investment (there are lots of rules about what an “investment” is, and this isn’t one) it is basically an at-risk donation. So I can’t reclaim VAT on it. On the other side, is it a sale? Does the supplier have to remit VAT to their tax authority on the sale. Well, probably. You can’t just wriggle out of VAT by trading exclusively on a crowdfunding basis. Tax fiddles don’t work, they can look at the substance of what is happening even if the details are a bit dubious. If it walks like a sale, and it quacks like a sale then the tax authorities will want their slice of the party.

The other twist to this is that the major crowdfunding platforms are based outside Europe, Kickstarter is in New York,  Indiegogo in San Francisco. The USA has state level sales taxes, and no VAT. The platforms are a party to the sale, you pay your money into their account, it is held in escrow for a bit, then released to the project with a percentage fee deduction. How does this affect the sale, am I purchasing the gift from the USA? Is there import duty now? Does this exempt it from VAT in some way or not?

This week our friends at OpenERP have launched their own crowdfunding campaign for a retail Point of Sale solution, based on our favourite little computer – the Raspberry Pi, and some other bits of hardware.

OpenERP Point of Sale

This is a cool project, I have been wanting to put together all these bits for some time, I bought a receipt printer and barcode scanner for development/demo purposes, but I don’t have a cash register and I have not had time to write the ESC/POS driver for the printer. This project will do the driver for the receipts properly and it assembles a set of reference hardware that can be reliably supported by OpenERP, which means we can help open up the retail sector to Free Software from the point of sale through to manufacturing, logistics, accounting and everything else. In short, this is great, I want it and it is a totally legitimate business expense for us – but I would really like to know how we account for the VAT element. Normally for a purchase from Belgium we would do reverse charge VAT, we notionally add 20% to it, then reclaim that back again, so there isn’t much net impact, but I have no idea if I need to do that on a crowdfunding pledge. Do comment if you have any thoughts on the matter!

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