BT and VAT.. A Percentage Call?

  rabadubdub 01:32 16 Apr 2003

I've just been reading how BT calculate the VAT on customers' payments (info inside back pages) and notice that they are making about £3.06 on every £100 you pay: "If you pay £30, £24.75 will be creditted to your account after VAT has been deducted."
Any fule know £30 inc.VAT is £25.53 ex.VAT.

They have clearly been pulling the wool over the customers' eyes for some time with this one. I wonder if the taxman knows about it, or the shareholders, or Oftel for that matter. I'm glad I'm not a customer and never will be until I get my cut of the selloff of my utility.. which aint gonna happen.

Glad to be of service;-)


  wiz33 05:35 16 Apr 2003

How do you may your calculations?

It would be very interesting to find out!


  AndySD 06:41 16 Apr 2003

£25.53 + 17.5% vat = £30 (or near enough to not matter. Therfore BT are keeping 78p

78 x 3 and 1/3 = £2.60

wheres the other 48p?

still its £2.60 they are not entitled to.

  rabadubdub 12:33 16 Apr 2003

BT have calculated VAT on £30 = £5.25 and then subtracted it to leave £24.75, the VAT onwhich is actually £4.33.

If you use the same method with £100, BT would be subtracting £17.50, leaving £82.50 towards your bill - VAT on which would be £14.4375 = a total of £96.9375 > A difference of £3.0625 on a £100 bill.

I hope this clarifies the maths for you.


  rabadubdub 12:41 16 Apr 2003

AndySD - VAT on £2.60 would account for the other 48p ...if it was declared.


  rabadubdub 16:56 16 Apr 2003

I've just checked an old phone book -1999- and they quote the same figures in that issue, so that is at least 4 years they've been scamming.
Not that I have a bee in my bonnet or anything:-)


  fitshase 18:19 16 Apr 2003

I think you should click here and send an e-mail to HM Customs & Excise stating that BT are not calculating their VAT properly and you demand an enquiry (or at least some clarification)!

It would be interesting to see what the outcome is because BT (amongst others) are complaining that AOL do not pay VAT yet BT are not doing their VAT calculations properly.



  fitshase 18:36 16 Apr 2003

From HM Customs & Excise site click here

7.3.1 VAT fractions

Tax is normally calculated at the appropriate percentage of a price that has first been decided without VAT, and the VAT invoice will show these separate amounts. However, sometimes VAT has to be calculated from a price in which it is already included (for example, in the less detailed VAT invoices described in paragraph 16.6.1). To do this, you need the VAT fraction.

For example:

If you sell something at £2.35

And the VAT rate is 17.5%

Then the amount of VAT is £0.35

However, £0.35 is not 17.5% of £2.35. It is 7/47 of £2.35.

This is how it is worked out:

Rate of tax (divided by) 100 + rate of tax

So, with VAT at 17.5% the VAT fraction is:
17.5(over)117.5 (i.e., 17.5/117.5) which equals 7(over)47 (i.e., 7/47).

It has me confused but I hope that it sheds some light on things.

Hope this helps



  Tenner 18:43 16 Apr 2003

It's the old schoolboy howler, " a man gets a 50% payrise ( so £10 becomes £15 ) he decides to give 50% to charity, and he's left with £7.50, why ? "

Well spotted, rabadubdub


  monkeyshine 23:44 16 Apr 2003

I don't believe HM Commissioners of Customs and Excise are quite as stupid as you would paint them.

  rabadubdub 23:43 17 Apr 2003

Well spotted yersel'. That's what I said, wasn't it? I know it's not what BT said. I'm not a customer so I can't make the complaint to Customs & Excise.

Exercise for today: find the oldest phonebook you can with the VAT info in it, to find out how much they owe in rebates (plus interest). Send your answers to Oftel.

Winners will be notified by post.


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