VAT on Mobile Phone Contract

VAT on Mobile Phone Contract

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Hi everyone, what are your thoughts on this:

If you are 12 months into a 24 month mobile phone contract and want to cancel the contract early, the network provider will clearly charge you the remainder of the monthly rentals, as agreed in the contract. Would the payment include VAT or not? I'm not talking about a termination charge I'm just talking about the network provider insisting that you pay off the full contract that is remaining.

Doesn't apply to me, there's just a conflict of views on this on certain websites where some people are saying that 'the network provider CAN'T charge VAT as you haven't used the service for the remainder that you are paying off'.

I personally disagree and think that VAT is chargeable as you are paying off a contract that was standard rated in the first place.

Quick thoughts/replies would be greatly appreciated.

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By neileg
15th Mar 2012 12:50

Compensation

Depending on hwo the contract is worded you are compensating the provider for loss of income rather than paying for the remaining 12 months service. Compensation is not subject to VAT.

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