NTL, VAT and Internet costs

Sarsfield

http://www.onbusiness.ie/2003/1219/ntl.html

I'm not a tax expert, but todays Supreme Court decision would appear to indicate we can expect a wee reduction in both cable and telecom rates next year, including Internet products.

Would anyone better educated in these matters care to crush my hopes?

Capt'n Midnight

From the article:
NTL had not been charging the 21% rate so there will be no rebate for consumers.


Eircom,
which has been charging 21%, also welcomed the decision, and said it would be looking at how the judgment might apply to its services.

ESB
A spokesperson for the ESB said that the company had always charged the lower 13.5% rate on connections so the ruling would have no impact on it or its customers.

Kinda says it all - What's the bet Eircom will anounce "massive savings" etc.

==================================

Once upon a time there was the youth employment levy 2% on - but someone won the case on the basis that since it was a levy it was tax deductabe - the next day a new tax law was passed to stop any one else caliming a tax refund...

Ripwave

Originally posted by Sarsfield
http://www.onbusiness.ie/2003/1219/ntl.html

I'm not a tax expert, but todays Supreme Court decision would appear to indicate we can expect a wee reduction in both cable and telecom rates next year, including Internet products.

Would anyone better educated in these matters care to crush my hopes?

"NTL should pay the lower VAT rate of 13.5% on fees for the supply of connections."

I think it only applies to the charge for a new connection, not for ongoing services.

(If it was going to result in a saving of a few euro a month to every home in the country, I'm sure they would have mentioned it on the 9 O'Clock news last night :-)

bealtine

quote:

---

(If it was going to result in a saving of a few euro a month to every home in the country, I'm sure they would have mentioned it on the 9 O'Clock news last night :-)

---

Actually they did mention it....specifically to say it would NOT result in cheaper
services to consumers. No explanation was given as to why that would be
just the bald statement.

I guess the service providers will pocket the difference (again)

Ripwave

Originally posted by bealtine
I guess the service providers will pocket the difference (again)

What difference? How many connection charges have you paid recently? The only time you're ever likely to encounter a difference is when you move house, and have to get a "new" connection for your phone, ESB and cable.

If oreillycom re-introduce a connection fee for new DSL connections, it will be charged at 13.5% VAT. (A technician install might still be charged at 21%, because you're supposed to be paying for the technican, not the connection - a distinction that only an accountant can appreciate!).

Sarsfield

Ah, I knew I'd gotten too excited about this. Connection only, not rental - silly me

Ho hum!

Capt'n Midnight

Point one

Guys Read the article. esp the bit that said
NTL had not been charging the 21% rate so there will be no rebate for consumers. - that's why it went to court.

Point two (please correct me if I'm wrong)
Materials vat 21% (used to be 20% 1/5th)
Labour Vat 13% (used to be 12.5% 1/8th)

AFAIK the rules on VAT (accountant needed) say that where different vat rates apply to different parts of the bill these should be shown., Conversaly you can't lump goods and services of different rates together on a bill at 21% - that's FRAUD - because charging someone 21% instead of 13% means that if the revenue don't get paid the extra 8% overcharged .....

Ripwave

Originally posted by Capt'n Midnight
Point one

Guys Read the article. esp the bit that said
NTL had not been charging the 21% rate so there will be no rebate for consumers. - that's why it went to court.

Point two (please correct me if I'm wrong)
Materials vat 21% (used to be 20% 1/5th)
Labour Vat 13% (used to be 12.5% 1/8th)

It's not Labour, per se, that's charged at 13.5%. The Revenue Commissioners aren't very specific about this (that's why it went to the Supreme Court!), but this is from their website :

The reduced rate of VAT increased from 12.5 per cent to 13.5 per cent with effect from 1 January 2003.

Amongst the goods affected are fuels (electricity, gas, oil, coal, peat and other solid fuels); immovable goods; certain concrete blocks and ready to pour concrete; certain printed matter (including newspapers, periodicals and brochures); photography and photographic prints; nursery or garden centre stock; certain bakery products; live poultry; and antiques and works of art.

Amongst the services affected are the provision of hotel and guesthouse accommodation; restaurants; cinema/theatre admissions; sports facilities; waste disposal; agricultural services; development of and work on immovable goods; car-hire and the hire of pleasure boats, mobile homes and caravans; repair and maintenance of movable goods (including dry cleaning and shoe repair); driving instruction; and care of the human body (including hairdressing).

Sales of certain goods by means of vending machines are also subject to the new 13.5 per cent rate and traders may have needed to adjust their machines accordingly.

Victor

Originally posted by Capt'n Midnight
Point two (please correct me if I'm wrong)
Materials vat 21% (used to be 20% 1/5th)
Labour Vat 13% (used to be 12.5% 1/8th)

AFAIK the rules on VAT (accountant needed) say that where different vat rates apply to different parts of the bill these should be shown., Conversaly you can't lump goods and services of different rates together on a bill at 21% - that's FRAUD - because charging someone 21% instead of 13% means that if the revenue don't get paid the extra 8% overcharged .....

It's 13.5% not 13%.

The lower rate applies to the fixed installation - the bit of wire, the connection box (not any disconnectable decoder etc.) and the labour in fitting. Essentially the case says the work should be treated like any work by any builder or normal electrician.

Note there is also the two thirds rule - if a material amount of the "work" is at the higher rate, everything is at the higher rate, e.g. if you are simply screwing a notice board to a wall it is 21%. This last point may be relevant to satellite installations, where the major cost is the dish, not the installation.

Johnmb

Originally posted by Victor
Note there is also the two thirds rule - if a material amount of the "work" is at the higher rate, everything is at the higher rate, e.g. if you are simply screwing a notice board to a wall it is 21%. This last point may be relevant to satellite installations, where the major cost is the dish, not the installation.

Just to note that the two thirds rule can be applied, but it doesn't have to be. If you provide a breakdown of what was done, and what was provided etc., you can charge the 13.5% on the relevant items. The two thirds rule is there to help the smaller businesses who don't have the expertise to do such a time consuming thing, so if over two thirds are to be charged at 21%, you can lump the whole lot in at that rate.