Pay monthly services

[barneyc]

Morning all.  By now you have probably had an email or SMS from VF pointing to http://www.vodafone.co.uk/personal/price-plans/pay-monthly/price-changes/index.htm which details VF's intention to raise contract (pay monthly) charges by the increase in VAT starting in the New Year.

It would be great to hear opinion on whether or not VF are actually able to do this on the basis that prices quoted for new & renewal contracts are given in inclusive form.  i.e. I was quoted (and have a renewal) at £35 per month for 24 months.  In that no mention of VAT was made and therefore it is deemed to be an inclusive price.

I get that my underlying package is actually £35 less the VAT by the way however I was quoted and sold an inclusive price NOT the exclusive price which would automatically allow for the change.

Any thoughts?

[XDA_dave]

from my own understanding, the bills are usually calculated first on line rental and usage charges before VAT is added, then VAT is worked out from that total, then added last

so say you have line rental of £25 per month.... (this is shown on the website which i think does include VAT)

and you go over any minutes by £5

so the line rental before VAT is         £20.62

and then you would add the usage   £5.00

to give a total before VAT of              £25.62

then VAT is added (in this occasion i will use 20%) which would work out as £5.22

this would give a total bill of  £30.84

the new VAT rise more than likely will be reflected at any of the sales channels as most of the prices usually do include VAT

if someone from VF can either correct me or back me up it would be of help

[Ross2]

a £35 a month priceplan includes VAT

a £35/month priceplan is £29.79 on your bills so they arent going to bring their prices down because the government gets greedy. same as in the shops, your sold something at £1. are you going to argue that its now £1.20 even though youve always had it for £1 lol. thats lifeee

[Stuartjw]

I was also sent the text and i am wondering the same.  My price plan was highlighted to me to include VAT and I will be rejecting the increase.

Price changes in shops is completely irrelevant in this instance - You do not have a contract with the shop for them to provide you with product at a set monthly fee.

[Johnmcl7]

I thought for consumers (rather than businesses) companies had to quote prices inclusive of vat? Given the VAT is external to Vodafone and they dropped the price when the VAT went down it seems reasonable the price goes up when VAT is increased.

John

[Ross2 · Accepted solution]

Doesnt matter if its a contract or in a shop, everything has VAT.

VAT goes up, so does everything else. You'll spend alot of time rejecting phone bills, tv licenceing, sky, broadband, and any other finances you have.

[hrym]

There'll be a clause in the terms somewhere that says, yes they can. As they reduced prices when VAT was reduced to 15%, they can't be accused of being unreasonable.

Or they may hold prices for now.   My broadband provider has anounced they won't be increasing prices (hint, hint!).

[markcoley]

I renewed my 24-month contract in August this year and was quite clear in asking what would happen to my bill in January 2011 when the VAT rate changed. The amount I pay now is a round number. I was told I would still pay the same in the new year as that was what I was committing to for the 24 months of my contract. It was on this basis that I agreed to renew. If my monthly bill increases I shall ask Vodafone to review the phone call in which the contract was agreed and ensure I pay what I agreed to.

[Trev]

Hi all

I now have an official statement concerning the change to VAT payments in 2011, so i thought it appropriate to place this here for all to view:

A few of you have been asking about the impact to your monthly contract cost as a result of the UK VAT charging increase from 4 January 2011. We’d like to clarify this for you.

All UK calls, phones and other devices, accessories and monthly line rental are subject to VAT and will include VAT at 20% from 4 January 2011 when the change comes in to place.

At times we do occasionally have to introduce new charges and we’re currently communicating this VAT increase to our customers through SMS and bill messages, providing you with at least 14 days notice in line with your airtime terms and conditions.

The full information about the changes can be viewed here.

I trust this clarifies the matter for you all.

Regards

Trev

eForum Team

[RupertTheFridge]

that all seems fair enough to me. The prices went down with VAT, so its only right they increase with VAT. This money goes direct to Government, and a not a profit kept by the network. 

[markcoley]

So was I mis-sold my contract? I specifically asked in August 2010 what would happen when the VAT rate was increased and I was categorically told I would still pay the same.

[markcoley]

Just as an addition to my above post: The extra in VAT is not going to be a huge amount but it seems wrong that Vodafone sales people can a) say something untrue in an attempt to get a sale or b) say something that was true at the time but then gets overruled at a later date. What was the point in having the conversation if what was said wasn't binding on both parties?

[Johnmcl7]

It's the contract you signed which was binding and it's the part that states changes in prices due to changes in VAT.

John

[bertyb]

Just again to add to the post above, I think the issue here is just proof, is an agent does not act recklessly then the company would be liable and tied to that commitment, but you have to be able to prove it, 

Speaking generally its sad, because what happens is customers become disillusioned and the person gain of one person ends up being a difficult call for someone else, and the possible exit of a customer in coming months, 

I also think it is a commercial decision, for example £20 per month is £17.02 + VAT at 17.5% and £16.66 at 20%, so if the 20 per month VAT rate change is passed on it becomes £20.42,  so the options are to pass on a 42p rise to the customer, or absorb 36p reduction in income from Vodafone, I am sure all the leading mobile companies waited to see what the others did, and that new contracts will all need to be looked at with either a reduction of minutes or something,  people are not going to be commercially happy for price plans to be called £20.42 per month, it sounds silly.

Personally the 40p to 60p in my mobile contract does not worry me, the approximate £1 per week in petrol and £2 or £3 per week in groceries and so on does a little bit more, but going back to the original point it would have been best to get the agent to text, and add it to your account notes, in which case there would be little choice but to honour it I would have said, the truth is the person you spoke to probably had no idea what would happen as companies everywhere have only just clarified it in last 2 or 3 weeks.

Perhaps if you can show thats what you relied on they will discount it by the relevant amount, good luck

[markcoley]

I will wait until January and see what happens to my bill. If it goes up I will ask Vodafone to review its recording of the phone call and provide me with an explanation of why what is written on a website takes priority over what was agreed to over the phone. The salesperson could easily have said that the charges would change with the new VAT rate, but he was quite clear they would not and I would still pay the same each month for 24 months.

[markcoley]

This makes interesting reading:

http://www.charlesrussell.co.uk/UserFiles/file/pdf/Corporate%20Tax/Briefing_note_-_Change_in_VAT_rat...

This is the section from the Value Added Tax Act 1994:

89. Adjustments of contracts on changes in VAT.

— (1) Where, after the making of a contract for the supply of goods or services and before the goods or services are supplied, there is a change in the VAT charged on the supply, then, unless the contract otherwise provided, there shall be added to or deducted from the consideration for the supply an amount equal to the change.

In my case, the contract I agreed to with the salesman did otherwise provide for the eventuality of the VAT rate changing. I specifically asked what would happen in January 2011 and I was told the price I paid would not change. Had I not asked, and had I not been told, the above act suggests it would be right and proper for the amount I pay to be adjusted as and when the VAT rate changed. But this was not the case with me. It is obviously in Vodafone's financial interests to presume that most people did not discuss the increase in VAT rate.

[Jenny1982]

I've up-graded my phone a couple months ago and i'm now paying £25 a month excluding insurance and i did ask the guy what would happen to the VAT in January and he said that the 20% VAT will apply as from 4th January which he worked out an extra 30p ish a month, which to me won't make any difference compared to shopping bills, household bills and travelling to and from work.

[race_change]

Reguardless, the paper you signed stated that vodafone reserve the right to adjust the bills at their whim (Ts&Cs).  You should have challenged it before putting ink to paper.  British law is a ######, business always wins, especially under the tories.

They could choose to absorb the cost, but what company is going to give up 2.5% of their profits?

14 days notice, they can do anything.  Except sort out a firmware bug.

[JoanHunterDunn]

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race_change wrote:

...what company is going to give up 2.5% of their profits?...

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Maybe a company where the Inland Revenue wrote off 6 billion in tax, using our money?

[race_change]

but that would be fair,  plus i've made the same comment somewhere on these boards, bet the Board gave their selves a tasty bonus outta that haul.