20% VAT On December Calls

Exhortation

According to 'i', quoting uSwitch, Orange, Three, Virgin and T-Mobile have charged people 20% VAT on calls made outside of allowances in December but which become chargeable during the current billing period. BT, Sky, Vodafone, O2 and TalkTalk, however, will only be charging the old 17.5% rate. 'i' goes on to say that "HM Revenue and Customs rules say companies who provide a continuous supply of service can calculate VAT at the time of billing, rather than when the calls were made, so customers will not get a refund."

Do they keep the difference or does the government get it?

Quentin

Government.

NFH

Yes, any VAT collected has to be passed on to HMRC, less the amount of any VAT that the company has paid to other VAT-registered businesses. The HMRC guidelines (section 3.4.1) are worded in such a way that charging the new rate on the whole bill is the norm, but businesses may choose to charge at the old rate on services provided before 4th January 2011. My guess is that changes in VAT rates are so rare that many companies haven't spent the money to adapt their systems to charge two different rates of VAT on the same invoice.

WelshPaul

it will go to HMRC then when the companies file their end of year taxes they will get it back.