Mobile users urged to check VAT charged on January bills
Mobile and landline customers are being warned to examine their January phone bills to check the rate of VAT that they have been charged. According to independent price comparison and switching service, uSwitch.com, some major phone firms are charging December phone usage at the new 20% rate of VAT - even though the calls and texts were made before the rise took effect. The move will particularly hit the 15% of pay monthly mobile customers that regularly go over their free call, text and data allocation, but with many consumers picking up the phone to contact friends and family over the festive period, more could be effected.
Most phone companies charge monthly line rental and call package fees in advance, so December line rental has already been billed at a rate of 17.5% VAT for most customers. But when it comes to billing for calls, texts and data usage outside of customers' fixed allowance, it seems that companies are making up their own rules. Customer bills show mobile networks Orange, Three and T-Mobile, as well as major landline supplier Virgin Media, charging a flat rate of 20% on all calls and texts made over the December-January period. By contrast, O2 and home phone giants BT, Sky, Vodafone and TalkTalk have split customer bills, charging 20% VAT on all calls made from 4th January and 17.5% for anything before this time. Only roaming charges outside of the EU escaped a VAT increase.
While a lack of strict guidance from the Inland Revenue means phone companies are not breaking any rules by charging 20% VAT on phone usage prior to 4th January, the move may be a bitter pill to swallow for the millions of consumers coping with higher bills this year. Earlier this month, uSwitch.com estimated that the VAT increase would add £22 a year to the average household pay-monthly bill, taking the annual total to almost £1,040 or £87 a month. Coinciding with this increase, some mobile networks have taken the opportunity to introduce a series of price changes, ranging from more expensive calls and texts to the removal of free voicemail and increased billing fees.
Ernest Doku, communications expert at uSwitch.com, comments: "The bizarre thing is the phone firms are not going to make any extra money from this situation - it all goes to the Inland Revenue. This is lazy billing and customers are bearing the brunt of it while the tax man is rubbing his hands with glee. The post-VAT price rises that providers have introduced may not seem like much, but the incremental hikes on essential services like call waiting and voicemail can really add up.
"We advise customers to take a closer look at their phone bills this month. If they think they've been unfairly charged they should contact their provider and ask for a refund."