Paying off contract early....

grumbler

I was just trying to say that it's not up to a company to decide whether to charge VAT or not. It's the government who desides what goods/services are exempt from VAT. If the company has to pay VAT, but says that that they don't charge it on, say, "cancellation charge", this is simply a usual discount, just bigger than the above 4%.
Very similar to car dealers offering to save on VAT when buying a car. This is just a discount that has nothing to do with VAT except the same amount.

Guys_Dad

grumbler wrote: »

I was just trying to say that it's not up to a company to decide whether to charge VAT or not. It's the government who desides what goods/services are exempt from VAT. If the company has to pay VAT, but says that that they don't charge it on, say, "cancellation charge", this is simply a usual discount, just bigger than the above 4%.
Very similar to car dealers offering to save on VAT when buying a car. This is just a discount that has nothing to do with VAT except the same amount.

Searched around thge net and found this
http://www.hmrc.gov.uk/manuals/vatscmanual/vatsc35600.htm Inland Revenue Web site.

Now this does not relate directly to mobile contracts - in fact it relates to leases, but the parallel is undeniable.

I quote "Breach of contract.

It is also possible for leases and other agreements to terminate early if a particular event occurs such as the customer breaching the terms or the lessee or an associate business calling in receivers. The contract deems that such events cancel its terms or effectively allow the lessor to terminate as though there had been a breach. Again, any moneys deemed due as a result are damages and outside the scope of VAT."

Not a lawyer, but seems to apply??

grumbler

Interesting...
This seems to mean that if a contract is terminated early some networks benefit in two ways:

1. they get money without providing services;
2. they get more money because they don't pay VAT that they would have paid if they provided the services.

ETA: this probably also means that some networks charge the full price unlawfully because damages cannot be bigger than the amount they actually lost, i.e. the cost of remaining months excluding VAT.

Guys_Dad

grumbler wrote: »

Interesting...
This seems to mean that if a contract is terminated early some networks benefit in two ways:

1. they get money without providing services;
2. they get more money because they don't pay VAT that they would have paid if they provided the services.

ETA: this probably also means that some networks charge the full price unlawfully because damages cannot be bigger than the amount the actually lost, i.e. the cost of remaining months excluding VAT.

Got it in one!

iAMaLONDONER

dazzaofdagenham wrote: »

Hi all

I have about 4 months left to run of my T.Mobile contract....However i no longer use as many minutes as the contract allows and find my PAYG SIM is better for me use.

Is there any benefit in letting the contract run vs paying it off early ?

I thought i read somewhere that if i pay it off early then i will not be paying the VAT on the future bills i am paying off?

Anyone ?

Darren

So what did you do?

grumbler

Is it your hobby to dig out ancient threads?

iAMaLONDONER

grumbler wrote: »

Is it your hobby to dig out ancient threads?

No but would it be a bad idea?