Eircom illegally charging VAT on cancellation fee

Tragedy

eircom: Tony wrote: »

Hi TheBody
We do not do 'Fobbing off' :eek: and respond to all queries when we can. I had a look at the original document and can see mention of 'European Court of Justice' (ECJ) 'in case C-277/05 Sociéte thermale d’Eugenie-Les-Bains'. and 'Revenue has revised its VAT treatment', this on it's own would seem to point to the fact that no quick answer is likely... :mad: nor could eircom be expected to offically comment on this.
I have been advised that clarification in this matter has been requested and I will be more than happy to post this here.
Tony

A quick answer is indeed possible, and here it is:
The judgement on C-277/05 Société thermale d'Eugénie-Les-Bains – Indirect taxation was in relation to VAT being charged on deposits for hotel rooms and if the VAT should be refunded when a room reservation was cancelled and the deposit not refunded. The judgement was as follows:

On those grounds, the Court (First Chamber) hereby rules:

Articles 2(1) and 6(1) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment are to be interpreted as meaning that a sum paid as a deposit, in the context of a contract relating to the supply of hotel services which is subject to value added tax, is to be regarded, where the client exercises the cancellation option available to him and that sum is retained by the hotelier, as a fixed cancellation charge paid as compensation for the loss suffered as a result of client default and which has no direct connection with the supply of any service for consideration and, as such, is not subject to that tax.

As such, it confirms that Eircom are indeed illegally charging VAT on cancellation fees.

That took me approximately 60 seconds work to find out, so your post does indeed seem to be fobbing people off.

We now have both the Revenue and the ECJ confirming that Eircom are illegally charging VAT on cancellation fees, and over 5 months later - no resolution.

cookie1977

Tragedy wrote: »

We now have both the Revenue and the ECJ confirming that Eircom are illegally charging VAT on cancellation fees, and over 5 months later - no resolution.

and do you think they're the only one?

Nervous Nigel

Fascinating.

I'm sure that Eircom are liaising with their advisors and/or Revenue regarding the matter.

It would be a big call (both from a risk and administrative perspective) to unilaterally start treating cancellation fees as being VAT exempt and to seek VAT refunds in respect of prior years. Eircom are therefore right to tread cautiously.

At least because Eircom should have contact details for its customers, "unjust enrichment" should not be relevant.

Claregirl

*Bump*

kippy

This query was raised almost 6 months ago. Unbelievable. Not blaming the reps here as I have no idea why this is going on but can I ask is VAT still being charged on cancellation fees with eircom and are other groups engaged in this practise currently aware that they may be acting outside of VAT regulations?

dahamsta

bump

dahamsta

And again.

kippy

dahamsta wrote: »

And again.

I wonder are the print media aware of this issue?

dahamsta

The Phoenix would be a good place to draw mainstream media's attention to it.

MadsL

An official compliant to The Office of the Director of Corporate Enforcement and the Revenue Commissioners would be next I'd say.

dahamsta

True. It'd probably need to come / be better coming from a customer or former customer that was affected by this though. I haven't been one for years, thank god.

cookie1977

dahamsta wrote: »

True. It'd probably need to come / be better coming from a customer or former customer that was affected by this though. I haven't been one for years, thank god.

Agree as most organisations wont take complaints from non customers no matter what the issue, sad to say.

eircom: Tony

dahamsta wrote: »

And again.

Hi
as stated in my last post
"As is usual , all vat collected would be done on instruction of Revenue and would be passed on to them, this would ot be initiated by eircom.. The issue, as posted previously, is under investigation but as this is a revenue issue as opposed to a specifically eircom issue I do not have any further information at this time. We will definitely post what ever information becomes available as result of investigation.

We have as yet not received any communication on this. We have been advised that as soon as we do have this information we can post here. I understand that this is taking some time, but until all facts are know to us here we cannot advise further.
I have pushed again for this information.
Tony

dahamsta

No problem Tony, I'll just keep bumping the thread until Eircom decides to follow up on the matter, as any responsibly company should. I'm sure you'll all be only too happy to have this matter sorted, dodgy charges no longer being applied, and the VAT refunded to everyone that's been overbilled.

eircom: Tony

dahamsta wrote: »

No problem Tony, I'll just keep bumping the thread until Eircom decides to follow up on the matter, as any responsibly company should. I'm sure you'll all be only too happy to have this matter sorted, dodgy charges no longer being applied, and the VAT refunded to everyone that's been overbilled.

That is what forums are for dahamsta.
Yes I would like to get this one cleared away. As I stated previousy any vat charges collected by eircom would not be for would be passed on to correct channels and not actually kept by us.
Tony

Fathead

Joining thread as i to have been charged this fee.

markfinn

Joining the thread also, as I was hit with cancellation fees plus VAT quite some time back... Doubt I'll ever get it back, but interested in seeing the outcome.

dahamsta

eircom: Tony wrote: »

That is what forums are for dahamsta.
Yes I would like to get this one cleared away. As I stated previousy any vat charges collected by eircom would not be for would be passed on to correct channels and not actually kept by us.
Tony

I understand how VAT collection works Tony. Unfortunately it doesn't change the fact that the procedure is illegal.

Plus of course there's the interest your company earns between collecting the VAT and giving it to the Revenue. How much are you taking in a month I wonder?

Johnboy1951

eircom: Tony wrote: »

That is what forums are for dahamsta.
Yes I would like to get this one cleared away. As I stated previousy any vat charges collected by eircom would not be for would be passed on to correct channels and not actually kept by us.
Tony

It is a simple procedure to refund overcharged VAT, and deduct the amount from the next VAT returns to revenue.
Nothing complicated about it at all.

All it needs is a decision by Eircom to give people back money they should never have been charged!

cookie1977

What eircom did with the money is neither here nor there (and really is between Revenue and themselves). Revenue did not directly charge the customer the VAT, eircom did. So if eircom are incorrectly charging VAT to cancelling customers then they must refund the customer, no matter what they did with the vat collected afterwards.

sidcon

So after reading this thread I refused to pay my cancellation charge until VAT was removed, this morning I go a phone call from Eircom stating that my point was correct and that I do not have to pay the VAT I have asked for a new invoice to be sent to myself for payment, when I get it I will scan it to show VAT removed. I suggest you all get onto Eircom and ask for the refund as its them that actually charged it.
Sid

dahamsta

If they're removing it for you they should remove it for everyone, without their input being required. I'd suggest sending a scan of the invoice and a link to this thread some of the morning radio shows, and maybe a few of the bigger newspapers.

Johnboy1951

sidcon wrote: »

So after reading this thread I refused to pay my cancellation charge until VAT was removed, this morning I go a phone call from Eircom stating that my point was correct and that I do not have to pay the VAT I have asked for a new invoice to be sent to myself for payment, when I get it I will scan it to show VAT removed. I suggest you all get onto Eircom and ask for the refund as its them that actually charged it.
Sid

Well done!

sidcon

dahamsta wrote: »

If they're removing it for you they should remove it for everyone, without their input being required. I'd suggest sending a scan of the invoice and a link to this thread some of the morning radio shows, and maybe a few of the bigger newspapers.

So got another call this evening saying that there system does not allow to send invoices without VAT. Told them they won't get paid until I receive an invoice as I cannot release payment without corresponding documentation. She told me she will do up a letter with details and charges on headed paper lets see what they send.

dahamsta

So did they expect you to pay the VAT anyway, because their systems are crap? They've some cheek. Well done for persisting with it.

MadsL

sidcon wrote: »

So got another call this evening saying that there system does not allow to send invoices without VAT. Told them they won't get paid until I receive an invoice as I cannot release payment without corresponding documentation. She told me she will do up a letter with details and charges on headed paper lets see what they send.

Trust me, it does. They just haven't set up the line item of cancellation charge to be 0% rated, as it would mean they no longer are able to charge VAT on new cancellations.

Effectively eircom have just said "Oh, we are going to continue charging customers VAT on cancellations as a matter of policy, but since you have pointed it out we are going to send you a special 'invoice'."

I would drop a line to eircom's CFO pointing out that their financial systems are setup incorrectly and that they have now publically acknowledged it. 

What they are proposing is to fudge it. I wouldn't accept it, and contact the Revenue Commissioners to ask why eircom are incapable of complying with the tax code on their main financial systems, and request and audit of those systems.

CFO is Richard Moat by the way

Jesus Christ

*bump*

MadsL

Jesus Christ wrote: »

*bump*

^

What would Jesus do? Come on eircom, any response???

Johnboy1951

MadsL wrote: »

^

What would Jesus do? Come on eircom, any response???

6th page .......  and still nothing ...... I guess it is indicative of something ....  make your own mind up what that 'something' might be ......

sidcon

Well I'm still persisting on this matter and they have still failed to issue me an invoice on the cancellation charge minus VAT. I have however received a letter from interim justia saying they are pursuing this matter as debt collectors on behalf of Eircom. I have just sent a letter explaining this matter to them and a reminder that any further correspondence with them is seen as harrasment and that I will peruse this matter in the courts. A copy has also been sent to Eircom as I'm still in correspondence with them.