Price increase to subscription - VAT?

Martin_Knott-Lewis

I have taken up a monthly subscription service and have just been notified of a price increase due to VAT. Can this be right? I got the following email nofifying me of the price increase. Shouldn't they have been charging VAT all along and shouldn't the provider simply absorb this cost?



I am writing to let you know that HMRC have confirmed we need to apply VAT to all subscriptions to our service, as of 1 January 2012.This means your monthly payment to us for this service will increase from £20 per month to £24 per month, inclusive of VAT.[FONT=&quot]You do not need to take any action. The change to your regular payment will be made automatically.[/FONT]

Lavendyr

Could be that they may not have breached the VAT threshold until now and may only now have had to register for VAT. Or, they may have been failing to charge VAT in error and have now been notified (possibly following an investigation by HMRC) that they should be.

Either way, if they are required to charge VAT then that's all there is to it. Whether they absorb the price increase by effectively reducing their sales price, or choose to pass it on down to customers, is a commercial decision that they would have to make (and appear to have decided to pass the 'cost' on).

pjclar02

Agree with the above post - however, if this is a monthly subscription presumably the price was set when you first signed up? Therefore, depending upon the wording of the terms and conditions, it is possible they may be in breach of your agreement by increasing the price

Lavendyr

Also a good point...