MSE News: Vodafone to issue mass refunds after billing blunder 27 August 2010 at 5:56PM edited 27 August 2010 at 6:12PM in Mobiles 8 replies 2.2K views

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"The mobile giant overcharged tens of thousands of mobile customers by wrongly adding VAT to non-EU use ..."

Read the full story:
Vodafone to issue mass refunds after billing blunder

Premier_2

Some could top £100 for high users, as £1,000+ overseas internet charges have been reported

:eek: :eek: :eek:

If that is true, I think those users could do with some serious money saving advice.

I didn't even pay £1000 in total for my annual holiday this year!

Vodafone to issue mass refunds after billing blunder

...Vodafone refuses to disclose how many people were affected, only saying the total represents a "very small proportion" of its customers...

:huh:

Estimates from the Association of British Travel Agents suggest around 3.5 million UK travellers visited a non-EU country during the problem period, the vast majority of whom will own a mobile.

This means 330,000 Vodafone customers on a monthly contract could have been outside Europe in that time given it has a 20% market share, ...

But to assume (a) that they all used their mobile whilst abroad and particularly that (b) they used it for internet access would of course be quite wrong

As you correctly go onto say:

...the potential numbers are still vast....

Indeed, it could have been as high as 3.5 million if all UK people that had travelled outside the UK had a vodafone mobile, took it with them, used it abroad whilst for internet access and weren't a business user

Of course, if the number could have been potentially even higher if even more people had done so! :cool:

Some refunds will total a few pence.

Quite.

bylromarha

Good on the user for not only fighting to get her refund, but using MSE to ensure others got their refund too.

Procrastinator333

"Rose Harris, MoneySavingExpert.com consumer products analyst, says:



If it had gone completely unnoticed, it could have netted the company millions of pounds in extra revenue."


I would be very surprised if this was true.



VAT does not run through the revenue line. While they may have incorrectly charged it, they will almost certainly treated this like other VAT. E.g. Not put it through revenue, but simply paid it over to HMRC.



So the question is whether the VAT man lets them have it back. Most likely they will. But if not, this will then appear as an expense in their next set of results.

BLT_2

A few years ago Vodafone had a similar glitch where they were charging people for free texts. When I rung up to query they said they were aware of the problem but were only refunding people when they asked for it.

Suffice to say I am no longer with Vodafone, I prefer to stick with a company I can trust

bubblesmoney

Procrastinator333 wrote: »

"Rose Harris, MoneySavingExpert.com consumer products analyst, says:



If it had gone completely unnoticed, it could have netted the company millions of pounds in extra revenue."


I would be very surprised if this was true.



VAT does not run through the revenue line. While they may have incorrectly charged it, they will almost certainly treated this like other VAT. E.g. Not put it through revenue, but simply paid it over to HMRC.



So the question is whether the VAT man lets them have it back. Most likely they will. But if not, this will then appear as an expense in their next set of results.

loads of shops like Marks and Spencer were charging VAT a few years ago on jaffa cakes at the biscuit rate but they fought a case that it was a cake and i think they won against HMRC and got the refund but obviously didnt hand it to the customers. Dont know if they donated it elsewhere though. So VAT wrongly charged to the customer and if the company realises it then they dont hand it to the HMRC but can keep it for themselves probably.

dtaylor84

bubblesmoney wrote: »

loads of shops like Marks and Spencer were charging VAT a few years ago on jaffa cakes at the biscuit rate but they fought a case that it was a cake and i think they won against HMRC and got the refund but obviously didnt hand it to the customers. Dont know if they donated it elsewhere though. So VAT wrongly charged to the customer and if the company realises it then they dont hand it to the HMRC but can keep it for themselves probably.

I have a vauge memory that there are fairly strict rules against that sort of thing. The problem is, that if HMRC give the VAT back to Vodaphone and they keep it, the end-user could (if VAT registered) claim back VAT from HMRC that has already been refunded to Vodaphone.

So I don't think they're allowed to do that.

vreemt

I don't think the number involved is

Premier wrote: »

as high as 3.5 million

as the post says 330,000 customers (which is based on their market share, the amount of that market share with contracts, the total amount of people travelling outside the EU - quick calculation gives 3.5 million * .2 * .47 = 329k) and only those with consumer contracts using data abroad were affected (so the number is probably less than 330k).
Unless I read the post wrong and the market share and contracts percentages were just 'added on' facts to the 330k statement.

To be more pedantic, the post itself says

The mobile giant wrongly ... But VAT should not be ...

where 'But' is used incorrectly, the paragraph it starts with does not contradict the paragraph before as that already mentions VAT shouldn't have been charged.


I'm glad vodafone now fixed the issue. I hope their current automated refunds will work for those affected and those entitled get a refund without any hassle (:

dave2

dtaylor84 wrote: »

I have a vauge memory that there are fairly strict rules against that sort of thing. The problem is, that if HMRC give the VAT back to Vodaphone and they keep it, the end-user could (if VAT registered) claim back VAT from HMRC that has already been refunded to Vodaphone.

So I don't think they're allowed to do that.

No they'd just issue a credit note and then issue the corrected bill without the VAT. I think you're thinking of unjust enrichment, and the M&S case makes for a good example of that:

Initially, HMRC refused to refund the VAT on the basis that the customers have overpaid the VAT, M&S would not be able to refund it to the customers and hence M&S would be unjustly enriched.

M&S subsequently (successfully) appealed on the basis that the market sets a price with no consideration of the VAT position. Customers are only interested in the total price, therefore the VAT that was paid over to HMRC represented lost profits for M&S.

However for Vodafone, they can trace who the money is due to and therefore would have to pay it over.