Could someone explain this to me please?!

[funkydan]

Retailers did not have to pass the rate change onto customers, you are assuming M&S had done this immediately.

Old price was £12, base £10.21 VAT £1.79
New price was £12, base £10.43 VAT £1.56 ie they adjusted the base price instead of relabelling the stock

Current price is £11.75, base £10.21 VAT £1.53

This is similar to you buying an item before Xmas for £10 and getting a £5 refund in the sales. The refund will be the current price, not the price paid.

I assume nothing. No, they did not have to pass on the VAT reduction but M&S did and are - it states just that on the original receipt: "VAT has been reduced from 17.5% to 15%. This saving has been passed on to you"

And as for your second point regarding refunds - if you have your receipt, you are entitled to a full refund for the original amount you paid, providing that the shop in question does refunds. If you do not have the receipt, you will then receive the current price and not the price you paid originally. Trust me, I worked for M&S for 8 years and something has gone wrong. If you buy something before Xmas for £10 and return it after Xmas, you should get £10. There is no reason why you should receive anything less than what you paid if you have your receipt!

[kernow]

You could go to the customer service desk and ask about why they are offering you a refund thats 25p less.

or try another till