Eircom illegally charging VAT on cancellation fee

sidcon

sidcon wrote: »

As I stated in my previous posts, I contacted the revenue department about it and they also agreed that you cannot charge vat on something that was not provided.
When the revenue wrote to Eircom on my behalf stating an overcharge, Eircom contacted myself and informed me that the system they use does not have the facility to charge zero % vat.
I told them in no uncertain circumstances that I need a invoice to be sent to myself for my records or the bill would not be paid.
They have since threaten me with solicitors and I threatened them back with mine and I was informed that I do not have to pay the bill.
Stand up for yourselves people the corporation is overcharging and they are to cheap to update their system because everyone is rolling over.

Their system doesn't need updating, it has many different codes for the different VAT rates. All it would take is one person to allocate the correct rate against the cancellation charge, 5 minute job. If their system didn't have the facility, it would also not have the facility to amend the VAT rate when the budget comes round.

Rather than continue to defraud the customer, they should amend their accounts software package immediately. VAT isn't our money or a companies money, it belongs to the revenue. If the revenue say that they do not require this money (as per their notice which is the instruction ALL vat registered businesses should adhere to), then plain and simple, it shouldn't be charged.

Could we get a list of media outlets together that we could all email? Is there a particular journalist for each publication ie: Sunday Business Post, that we could notify? I don't read newspapers too often so would know who to approach but I am happy to contact whomever needs to be contacted.

Johnboy1951

sidcon wrote: »

Herr Khume Schuccs wrote: »

Why do Eircom consider this is a legal issue still under consideration? The European Courts of Justice have ruled on this issue years ago, being the highest court in the EU I'm afraid this is no longer speculation and Eircom's opinion on the rights or wrongs of this do not really matter. The Irish authority on taxation, the Revenue Commissioners, include this ruling as part of the current position in relation to VAT in Ireland (see their website), to clarify anything related to this Eircom should simply contact the Revenue Commissioners. Could Eircom briefly outline all the work they have been doing to clarify this issue over the last few years?
This was one of the issues I raised with Eircom after the cancellation charge in lieu of 1 months notice that was imposed after moving from them last year, their final reply last month was very clear that the VAT charged was correct and that I had to pay it - no mention that the whole issue was under investigation. This sort of carry on from Eircom is nothing new, even though ComReg had ruled against the 1 month notice charge, Eircom subsequently informed me that that charge was correct also and I would be pursued for payment. Looks like Eircom are a law unto themselves!

As I stated in my previous posts, I contacted the revenue department about it and they also agreed that you cannot charge vat on something that was not provided.
When the revenue wrote to Eircom on my behalf stating an overcharge, Eircom contacted myself and informed me that the system they use does not have the facility to charge zero % vat.
I told them in no uncertain circumstances that I need a invoice to be sent to myself for my records or the bill would not be paid.
They have since threaten me with solicitors and I threatened them back with mine and I was informed that I do not have to pay the bill.
Stand up for yourselves people the corporation is overcharging and they are to cheap to update their system because everyone is rolling over.

I wondered if you had contacted the Revenue Commissioners for clarification and not only Eircom revenue department?    .....  or do I misunderstand?

sidcon

Johnboy1951 wrote: »

I wondered if you had contacted the Revenue Commissioners for clarification and not only Eircom revenue department?    .....  or do I misunderstand?

No I contact the Revenue commissioners office that looks after the fingal area and they were very helpful in sorting this matter out

NicoleL88

This is actually shocking carry-on altogether. Both the illegal charge and the complete lies being distributed by Tony. Nearly two years later and no answer on this and he still has the gall to say it's being looked into?

Jesus christ.

Donnielighto

NicoleL88 wrote: »

This is actually shocking carry-on altogether. Both the illegal charge and the complete lies being distributed by Tony. Nearly two years later and no answer on this and he still has the gall to say it's being looked into?

Jesus christ.

Crooks

yawhat!

Ur in for it now Tony.

On a more serious note I guess the revenue hopes it blows over! I will be emailing every radio station and paper in Ireland this thread and I am sure some will run it. People will be requesting a lot of refunds! Revenue and eircom have a lot to answer for!

Fred Swanson

This post has been deleted.

EireGreg

yea whats the latest, very strange

fergus1001

bump this needs to go to mr rabbite

Johnboy1951

I am inclined to the view this does not apply in the case of a customer cancelling, before the end date of the current contract, a service they have been receiving, and that it only applies to cancelling an order for a service which has never been supplied based on that order.

I posted the above in reply #108

I have read nothing before or since that indicates this interpretation is incorrect.

So of all those posting here, how many have been charged VAT for cancelling an order for a service they never received?

******

The above in no way releases Eircom from their duty to properly inform us .......  and this they have not done nor even attempted to do.

That is a DISGRACE!

Herr Khume Schuccs

Hi Johnboy1951, I can see your point, the interpretation of legal speak is difficult for most of us, something I avoid as much as possible. My laymans view is that the ECJ ruling related to VAT following the cancellation of hotel bookings (where there was no supply of service) but also covered the cancellation of other services. I do not see the ruling stating it is only in circumstances where the service 'never' takes place, just where a supply does not take place. So for example, if I was getting a supply & paying for it + VAT, say up to end 2013, then I cancel the service, but the company imposes a cancellation charge in lieu of notice for the first month of 2014, I do not get any supply for Jan 2014, is VAT still payable for Jan as a supply does not take place? My interpretation would be no, this is compensation to the company not a payment in respect of a taxable supply - based on Revenues own publication on the ECJ ruling, containing a section 'Effect of Ruling in Ireland' (see 3.2).
'3.1. The ruling affects the VAT treatment of forfeited deposits, owing to a cancellation by the customer, not only in the hotel services sector but also in relation to the supply of other services and goods.
3.2. A charge levied by a supplier when a customer makes a cancellation (“cancellation charge”) and a supply does not take place, is to be treated as falling outside the scope of VAT by virtue of it being regarded as compensation and not a payment in respect of a taxable supply.'

Revenue seem to have taken this notice down from their website recently and may be re-interpreting, as it would reduce the VAT revenues (I have a copy of what they had originally published). In my case, I was out of the 1 year contract, the bill states 'Charge in lieu of one months notice to cease service' and VAT was added to this charge. This issue has been dragging on for a long time already, so we could still be waiting for the final outcome for some time yet, I won't hold my breath.
HKS

Johnboy1951

Herr Khume Schuccs wrote: »

Hi Johnboy1951, I can see your point, the interpretation of legal speak is difficult for most of us, something I avoid as much as possible. My laymans view is that the ECJ ruling related to VAT following the cancellation of hotel bookings (where there was no supply of service) but also covered the cancellation of other services. I do not see the ruling stating it is only in circumstances where the service 'never' takes place, just where a supply does not take place. So for example, if I was getting a supply & paying for it + VAT, say up to end 2013, then I cancel the service, but the company imposes a cancellation charge in lieu of notice for the first month of 2014, I do not get any supply for Jan 2014, is VAT still payable for Jan as a supply does not take place? My interpretation would be no, this is compensation to the company not a payment in respect of a taxable supply - based on Revenues own publication on the ECJ ruling, containing a section 'Effect of Ruling in Ireland' (see 3.2).
'3.1. The ruling affects the VAT treatment of forfeited deposits, owing to a cancellation by the customer, not only in the hotel services sector but also in relation to the supply of other services and goods.
3.2. A charge levied by a supplier when a customer makes a cancellation (“cancellation charge”) and a supply does not take place, is to be treated as falling outside the scope of VAT by virtue of it being regarded as compensation and not a payment in respect of a taxable supply.'

Revenue seem to have taken this notice down from their website recently and may be re-interpreting, as it would reduce the VAT revenues (I have a copy of what they had originally published). In my case, I was out of the 1 year contract, the bill states 'Charge in lieu of one months notice to cease service' and VAT was added to this charge. This issue has been dragging on for a long time already, so we could still be waiting for the final outcome for some time yet, I won't hold my breath.
HKS

looking at 3.2 ......  if the supply has never taken place .......  in other words I order something but do not accept/receive it, then VAT is not applicable on any cancellation charges.

but if I have ordered a supply for 12 months, and have received the service for 6 months based on that order, then it could be argued that the supply has taken place and is taking place at the time of cancellation. I would so argue  ;)  In that case VAT would be applicable to the cancellation of the order/contract.

Of course this is all speculation and opinion and nothing more  :D

RustyNut

eircom: Mark wrote: »

cookie1977 wrote: »

Any update on this OP. Did eircom withdraw the vat charge?

Hi Guys,

Apologies for the delay in getting back to you. We have escalated the issue on the 31/07/12 to have an official response drafted.

We should have a reply by early next week.

Sorry again for the wait.

Mark

???

Herr Khume Schuccs

Thanks Johnboy1951, I might not even be on the right mountain in relation to this, it is good to look at all angles, I think the fact this case was based on a hotel reservation causes some confusion, usually it is pretty straightforward, either you turn up or you don't. However, say you booked in for 2 nights @€;100 per night - you stayed for the first night but cancelled the second. You pay €100 + VAT for the first night (since you got the service) and pay €100 compensation for the second night (you had an agreement to stay the second night and did not give the required cancellation notice so you owe the hotel compensation for that night, but no VAT applies for the second night since no service is received). The hotel might manage to let your room to someone else for the second night, charging them €100 also, on which VAT would then apply. If you had already paid VAT for the second night, VAT would then be paid on the double for the same service.
Section 3.2 does not say where 'the supply has never taken place', it just says where 'a supply does not take place' - so the fact of previously recieving or not receiving a supply would seem irrelevant. In your example, I think you would pay for the 12 months supply (as per your order), but if you only actually received 6 months supply, you would only be liable to VAT on the 6 months that you received. How you pay is then an issue, if you pay on a monthly basis you could adjust your payments accordingly, if you paid all up front, you would need to claim back the second 6 months VAT (that you did not receive the supply) from Revenue. Apologies if I am not explaining my point too clearly, I have attached the notice Revenue had originally posted on their website to explain the ECJ judgement & now appears to have been removed, it may be of assistance.
HKS

Johnboy1951

Herr Khume Schuccs wrote: »

Thanks Johnboy1951, I might not even be on the right mountain in relation to this, it is good to look at all angles, I think the fact this case was based on a hotel reservation causes some confusion, usually it is pretty straightforward, either you turn up or you don't. However, say you booked in for 2 nights @€;100 per night - you stayed for the first night but cancelled the second. You pay €100 + VAT for the first night (since you got the service) and pay €100 compensation for the second night (you had an agreement to stay the second night and did not give the required cancellation notice so you owe the hotel compensation for that night, but no VAT applies for the second night since no service is received). The hotel might manage to let your room to someone else for the second night, charging them €100 also, on which VAT would then apply. If you had already paid VAT for the second night, VAT would then be paid on the double for the same service.
Section 3.2 does not say where 'the supply has never taken place', it just says where 'a supply does not take place' - so the fact of previously recieving or not receiving a supply would seem irrelevant. In your example, I think you would pay for the 12 months supply (as per your order), but if you only actually received 6 months supply, you would only be liable to VAT on the 6 months that you received. How you pay is then an issue, if you pay on a monthly basis you could adjust your payments accordingly, if you paid all up front, you would need to claim back the second 6 months VAT (that you did not receive the supply) from Revenue. Apologies if I am not explaining my point too clearly, I have attached the notice Revenue had originally posted on their website to explain the ECJ judgement & now appears to have been removed, it may be of assistance.
HKS

Yes I guess it will depend on the interpretation of 3.2

3.2. A charge levied by a supplier when a customer makes a cancellation (“cancellation charge”) and a supply does not take place, is to be treated as falling outside the scope of VAT by virtue of it being regarded as compensation and not a payment in respect of a taxable supply.

As I see it the decision depends on the interpretation of the supply being an on-going one from a contract ....  say broadband paid monthly or yearly  .....  is breaking the contract an interruption of an existing supply or not.
If the supply is regarded as existing (on an ongoing basis) then that might have a different result to what you see as not having received the supply for the future months of the contract (example).

I 'suspect' that as the order and contract would be for say 12 months, once that supply has started, then it is an ongoing one and VAT might be chargeable.

As I mentioned ......  all only opinion ......  up to Revenue to make a determination, which they seem to be avoiding at present  :)

Herr Khume Schuccs

Good points Johnboy1951, it is a difficult one to call, while I think the ECJ intention was that there would be no VAT liability for any time a service is not actually provided, Revenue will be under pressure to make a decision that does not cost the state. I would not bet on the outcome, HKS.

Herr Khume Schuccs

RustyNut wrote: »

eircom: Mark wrote: »

cookie1977 wrote: »

Any update on this OP. Did eircom withdraw the vat charge?

Hi Guys,

Apologies for the delay in getting back to you. We have escalated the issue on the 31/07/12 to have an official response drafted.

We should have a reply by early next week.

Sorry again for the wait.

Mark

???

Hi RustyNut,
Irrespective of what Eircom now do, it is Revenue that will refund any VAT that was incorrectly charged previously (see section 6 of their notice). Anyone who has paid this should contact their district tax office for advice, claims must be made within 4 years.
HKS