Vodafone VAT

Deehem

I'm hoping somebody can confirm whether I'm going mad or not.

Last month my wife and I upgraded our phones with Vodafone. Both phones are under my account.

We traded in two of our devices for a total of £84.00 account credit. On top of this, we have the Vodafone advantage discount.

I received my vodafone bill today at a subtotal of £101.30. This is for both phones.

The £84.00 account credit was applied, this should take the subtotal down to £17.30 and with the £3.23 advantage discount, to £14.07 which Vodafone states my subtotal is.

Now with the £14.07 subtotal that I and my bill agree on, VAT of 20% is shown on the bill as being charged at £20.26 (which is 20% of the original bill, prior to the discount, at £101.30). For this reason Vodafone are charging me £34.33 (£14.07 + the £20.26 VAT).

As far as I'm aware, discounts on a bill should be applied before VAT is charged, and VAT is to be charged on the amount after the discount (stated here).

Vodafone insist that their calculations are correct, and that I should be paying £20.26 VAT on a £14.07 total.

I'm no VAT expert, but this doesn't seem sane to me. I'm hoping somebody may be able help.

Thanks in advance!

grumbler

Deehem wrote: »

As far as I'm aware, discounts on a bill should be applied before VAT is charged, and VAT is to be charged on the amount after the discount (stated here).

Are your contracts business ones?
If not, any price that is quoted before VAT is absolutely irrelevant for you.

Deehem

grumbler wrote: »

Are your contracts business ones?

They are standard consumer contracts, not business.

grumbler

Forget about the price before VAT then.
Your discount applies to the full price that includes VAT that is the only relevant price for a consumer.

Deehem

So their calculations are correct?

I would have thought the VAT would have been charged on the amount after discount?

grumbler

Would have you thought this for any discount voucher?

http://www.hotukdeals.com/all/vouchers/hot

Deehem

Yes, since the consumer is not handing over the full amount VAT is being charged on.

grumbler

Deehem wrote: »

.... the consumer is not handing over the full amount VAT is being charged on.

Really?
It's businesses who don't handle over the full amount of collected VAT to HMRC.
Customers always pay full VAT on all goods/services that aren't VAT-exempt.

Dragonfly1

I see where you are both coming from. Instead of the word discount, think of it like a gift card.

Your bill is say £100. But you have £80 worth of gift cards to help pay your bill. But your overall bill is still £100 so you have to pay £20 VAT. It's just that you can pay some of that bill with your gift card. £100 + £20 VAT - Gift Card of £80.

Anyway, makes sense to me when I think of it like that. I may be completely wrong Grumbler will put me right if so

Deehem

In which case, VAT should be inclusive of the price surely?

I'll use the analogy of walking in to a high street clothing store and seeing 80% off.
I pick up a nice pair of £50 jeans for £10. Good bargain!
I get to the checkout and the price is £20 instead (£10 + the 20% VAT on £50, the original price before discounts, an additional £10).

Deehem

Dragonfly1 wrote: »

I see where you are both coming from. Instead of the word discount, think of it like a gift card.

Your bill is say £100. But you have £80 worth of gift cards to help pay your bill. But your overall bill is still £100 so you have to pay £20 VAT. It's just that you can pay some of that bill with your gift card. £100 + £20 VAT - Gift Card of £80.

Anyway, makes sense to me when I think of it like that. I may be completely wrong Grumbler will put me right if so

That makes a lot of sense. I just like understanding where I'm coming from. I'm usually on the other side of VAT when raising queries!