Irish Phone Companies Given Deadline On VAT Refunds

by Caroline Maxwell, Tax-News.com, London

26 March 2002

The Irish Revenue Commissioners last week gave several of the country's largest phone companies just eight weeks to refund over 1 million euros in overcharged VAT to their customers.

According to the tax department, many phone users have been overcharged 1% VAT on calls made in January and February, despite the fact that the increase in the standard rate of value added tax from 20% to 21% did not actually come into effect until March 1.

Speaking on Thursday, the Revenue Commissioners announced that the due date for the VAT to be paid over to the Government is May 19, and added that this would provide the offending companies with 'ample opportunity to credit customers or pay out refunds'. If no action is taken, the tax department revealed, it will 'take the matter up' with the companies in question.

However, the phone companies have defended the move, with an Eircom spokeswoman explaining to the Irish media on Friday that the company felt that they had treated the VAT changes consistently, Vodafone arguing that the directive from the Revenue Commissioners came too late for it to change its billing system, and Digifone asserting that the application of VAT on the invoice date and not the call day is the 'standard legal method' for dealing with VAT changes.

Speaking last week, however, Chief Executive of the Irish Consumers' Association was scathing regarding the phone companies' responses:

'To be realistic, they need to change their biling system so it can cope with VAT alterations,' he explained, adding that: 'It is not as if this is the first time we've had a VAT change, and it will not be the last.'

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