MSE News: Virgin Media uses VAT rise to retrospectively hike phone prices

corbyboy

What a nonsense "news story".

The VAT rate's usually determined when you pay or when a tax invoice is raised. When the latter administrative function happens is down to the retailer.
So if you pay now but receive the goods in 2011, 17.5% VAT is due.

Where did I take this quote from? Another MSE news article that's where.

You pay the VAT rate of when the bill was raised, not when you used the service. A good example is mobile phones. If you pay your January line rental in December you will pay December's VAT rate even though you receive the service in January. But it works the other way around too, as we can see in this example.

In fact not only is this not a "stealth price hike" but VM are doing things the way they are supposed to. It's BT, Sky and TalkTalk that are doing things the wrong way, they are just choosing to be kinder to their customers.

Taiko

As Corby said, hence why on the invoice it shows tax point date. This is a simple thing, and will apply to all utilities too.

cactusdust

Landlines are awfully expensive nowadays when you factor in the price of mobile phone packages.. even on pay as you go.

vikingaero

If 1 in 100 Virgin customers makes a complaint and then escalates the complaint to OTELO for the hell of it...

shuey

once again well and truely shafted by certain retailers. Always increasing prices and not doing any decent deals and trying to scam the pennies we hold on to , to survive.

Former_MSE_Guy

glider3560 wrote: »

Still misleading as the headline says "...retrospectively hike phone prices". Phone prices haven't increased - the VAT charged on them has. When prices are given ex. VAT anyway, I find the headline very misleading.

In fact, the Virgin price list even says "Please note that VAT is applied at the rate prevailing when your bill is prepared, not when the call is made."

Of course the price has risen because people are paying more to use their phone, that's quite simple. As for your second point, Virgin could say "we'll charge you £1 million per call", but that doesn't make it right.

mrJ_5

MSE_Guy wrote: »

Of course the price has risen because people are paying more to use their phone, that's quite simple.

The call charges are listed as +VAT - so they haven't risen at all, what has increased, however, is the VAT that is applied to the call charges.

The headline is misleading - I read it expecting to see that they increased the prices by more than the VAT increase. eg. if the price was £11.75 before (£10+VAT) I'd expect that the price now would be more than £12 (like £12.50 or so) - a very misleading headline!!!

Like other posters have said, the invoice was raised after the increase took affect so they are valid invoices - Virgin Media have done nothing wrong.

I'm sure you'll find that BT, TalkTalk, and Sky's pricing would have gone up too inline with the VAT increase since all call charges are listed as +VAT.

Next up on MSE, a different company that increased their prices by the correct amount due to the VAT increase!

corbyboy

MSE_Guy wrote: »

Of course the price has risen because people are paying more to use their phone, that's quite simple. As for your second point, Virgin could say "we'll charge you £1 million per call", but that doesn't make it right.

Guy, as news editor you really need to be careful about the things that you say. Especially when they are factually incorrect.

As I stated in post 12 Virgin Media have generated the bills exactly as they are supposed to. Just because BT and the others have done it differently which is to the customers', doesn't mean they are right.

Here is the quote again:

The VAT rate's usually determined when you pay or when a tax invoice is raised

Can you please explain why the above should not be applied to phone bills?

alexlyne

ahh, but despite the above argument on vat dates, Virgin are being especially kind to its customers:

"In order to make these increases as manageable for our customers as possible, we have rounded down the VAT increases to the nearest penny."

I'm completely overblown by this goodwill generosity. I can't see how anyone will not be able to manage the increase now.

WestonDave

I'm in the non story camp. VAT is determined by the tax point which is the earlier of when the money is handed over or the date the invoice is prepared. Virgin have acted perfectly correctly in applying VAT legislation, especially if this is the approach they adopted when the VAT rate was reduced (HMRC would expect a consistent approach). There is a concessionary arrangement for long term contracts which allows the VAT rate to be split - note it allows it does not require! Interestingly there was a widely used "scam" when VAT on fuel was introduced which exploited this by encouraging people to pay up front for their fuel before the VAT was imposed, thereby creating an early tax point and avoiding the new VAT.

There is no point hounding Virgin over this - the VAT increase nor VAT regulation is not their fault and they derive no benefit from it as whatever rate they use simply results in it all being handed over to HMRC. Prices have not risen - the tax on the underlying price has risen which is why we pay more. On a site which champions financial education, it should be the policy to present the correct if more complicated version rather than the simplistic headline grabbing version. This story is a bit like sayings its BP/ESSO etc's fault that petrol prices went up when the fuel duty was increased.