Phone firms increased VAT before the 20% rise
Some phone companies have charged customers millions of pounds extra by bringing forward the January VAT rise by up to three months.
According to a report in today’s Daily Mail, The Post Office increased the sales tax for its 500,000 telephone customers to 20% from early October. Orange, T-Mobile, Three and Virgin Media brought forward the increase to the beginning of December.
Although the move will infuriate the millions of customers caught in the tax trap, it is perfectly legal under Government rules. The extra cash, which is likely to run to several million pounds, will not go to the phone companies, but straight into Treasury coffers.
The decision to bring forward the rise – which the taxman insists is at the companies’ discretion – has been described as ‘lazy billing’, as it is an easier and cheaper option for the firms than changing computer software to reflect a change part-way through a billing cycle.
Research by uSwitch found the mobile networks Orange, Three and T-Mobile, as well as major landline supplier Virgin Media, were charging a flat rate of 20% on all calls and texts made over the December to January period.
But uSwitch pointed out that many other companies – including O2, BT, Sky, Vodafone and TalkTalk – have charged the higher rate of tax only on calls made after January 4.
The Post Office and Virgin Media said they had followed HMRC rules, while Orange, T-Mobile and Three said that if customers were concerned about the charges, they should get in touch.
