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65,000 overcharged as Eircom hikes VAT before New Year

AROUND 65,000 telephone and broadband customers have been overcharged by Eircom because it applied the New Year VAT increase before it kicked in.

The telecoms giant admitted last night that it had incorrectly hiked VAT on thousands of customers' bills in December.

This price hike was implemented even though the VAT increase to 23pc announced in the Budget didn't actually come into force until January 1.

The error will cost customers close to €100,000 in excess VAT payments, but Eircom said all those affected would receive a credit on their next bill.

The communications watchdog ComReg said yesterday it was aware of the problem and had been in touch with Eircom about the matter.

"Eircom has confirmed to ComReg that, during December 2011, it issued a number of consumer bills for electronic communications services with the incorrect VAT rate applied (23pc instead of 21pc).

"Eircom has also confirmed that it will reimburse its customers on their next bill," said a statement.

Eircom had said it would be passing on the higher VAT rate to customers in accordance with Revenue rules, with the exception of a limited number of fixed and mobile products where the company would absorb the VAT increase themselves. However, the rules state that telecom suppliers are liable to VAT at the rate chargeable on the date when the bill is issued -- even if the bill covers services that have already been supplied or charges for line rental in the future.

Telecom services billed before January 1, 2012, are taxable at 21pc and services billed on or after January 1, 2012, should be taxed at 23pc.

Eircom said it had notified Comreg of the incident and the steps taken to rectify it.

It said the average impact of their error on a customer's bill was €1.44, which, given the numbers affected, amounted to overcharging of €93,600.

"Eircom confirms that it has incorrectly applied the new VAT rate of 23pc to approximately 65,000 customers who have had bills issued in late December," said a statement following inquiries from the Irish Independent.

One Eircom customer reported on the website www.askaboutmoney.com about being charged VAT at the new higher rate of 23pc instead of the old one of 21pc, for a bill issued on December 31.

They had rung to complain and had been promised a credit note after telling Eircom the rules were very clear that the VAT rate that was used on the bill should be the one that applied at the time of billing. The National Consumer Agency said it had not received any complaints from Eircom customers but had received some queries about the VAT increase in general.

"The NCA would expect all companies to ensure their customers are charged the appropriate VAT rate and, if an error occurs, the company should seek to rectify the issue immediately and refund any money due to their customers," said the NCA.

It advised all consumers to check the details on their bills and contact the company in question as soon as possible to seek a refund if they believed there was an error.

Irish Independent