Phone company charging 21.5% VAT in Jan,2010

I received a Bill Pay phone bill in Jan 2010.. it shows a 21.5% VAT Rate.

The services billed were provided from approx. mid Dec 2009 to mid Jan 2010 but the bill was raised in Jan 2010, and is payable in Feb 2010.

I emailed the company. They said that when VAT rates went up in Jan 09 they didn't increase prices, so they absorbed the VAT increase. They also mention that they didn't have time to change their systems so that bills issued in Jan 2010 show (and apply) a 21.5% VAT rate, and they say this will be changed to 21% from Feb 2010.



What do people think about this?

I can see their point to be honest, but it's still illegal is it? (I can't see their point about staffing, that's silly, but I can see their point about absorbing the VAT increase in Jan 2009, and now being out of pocket in Jan 2010)


They can choose not to increase prices when VAT rates are going up, but surely they have to reduce prices when VAT rates are going down?



Some example figures to illustrate..
Dec 2008, service costs 100 + 21% VAT = 121 Euros total

Jan 2009, no price increase, so 'new' prices are
service is 99.59 + 21.5% VAT (21.41) = 121

Jan 2010, price decrease required? so new prices of
service is 99.59 + 21% VAT (20.91) = 120.50


Any thoughts?

It sounds like a very dubious excuse- they were able to adjust their systems last year but not this year.

The VAT rate they charge is set by legislation. It is not within the company's right to decide for themselves whether they will charge rate A or rate B.

You could send them a payment for the amount using the correct VAT rate and a note indicating that the rate charged is set by the tax authorities. If they wish to discuss this matter further they should 'seek clarification' from the Revenue Commissioners etc etc

Although this only explains a portion of the bill, for services rendered in 2009, the 21.5% VAT rate would be applicable, even if billed in 2010.

WaterSprite said:

Although this only explains a portion of the bill, for services rendered in 2009, the 21.5% VAT rate would be applicable, even if billed in 2010.

Click to expand...

My understanding is that it is the date of the invoice that is the key as regards what VAT rate to charge.

DB74 said:

My understanding is that it is the date of the invoice that is the key as regards what VAT rate to charge.

Click to expand...

Sorry - my point was for VAT accounted for on the cash basis only. I should have checked that against VAT on an invoice basis before I posted. The 21% would apply where VAT is accounted for on an invoice basis, provided the invoice was issued after Jan 1st 2010.

Just an update on this... I'm the OP.

The phone company appear to be completely dismissive of this issue.. even though they have over a million customers, and may have overcharged the VAT anywhere from 200,000 to 500,000 Euros... that higher figure is half a million Euros!

Although each customer has only been overcharged a small amount, it adds up to a huge amount overall... I'm not sure if they intend to pass on the incorrectly charged VAT to Revenue, or if they intend to keep it for themselves...

What do people think I should do about this? should I report it to Revenue?


A link to a document on the Revenue website discussing the VAT changeover in general, and rates that should apply..
http://www.revenue.ie/en/tax/vat/leaflets/vat-rate-change.html)


quote from above page from Revenue.. (Telecommunications specific)
8.2 Telecommunications services billed before 1 January are taxable at 21.5% and telecommunications services billed on or after 1 January are taxable at 21%.



I'm not trying to be vindictive by the way.. it's just this company ignore questions, or answer them with clearly false information,.. they also break the law in some respects and refuse to acknowledge that.. overall they're quite poor it has to be said.. this seems to be common in the Telecommunications Industry, .. probably because of Comregs failure to do anything about these on-going problems.. is there any way these companies can be forced to observe the law?

Cheers so,