by Skilled Contributor
Skilled Contributor

VAT when cancelling contracts

When leaving ee early, it says that that you will need to pay the monthly fee for each month outstanding minus vat.

 

On the forum I constantly see that peopel are saying the monthly fee minus vat @ 16.7% yet we pay 20% so surely it should be the monthly fee minus 20% vat

 

Can someone confirm this

4 REPLIES 4
by Profile closed
Not applicable

Re: VAT when cancelling contracts

It’s down to the way it’s calculated.  

 

It’s not just your current monthly payment -20% as that isn’t the same as your monthly payment excluding VAT.

 

Example:

 

You pay £20 per month.  That is £16.67 + 20% VAT (VAT = £3.33) = £20.00 (rounded)

 

Just subtracting 20% off the total £20 (i.e. to give a figure of £16.00) isn’t the correct way to calculate VAT as £16 + 20% then would only come to £19.20 and not £20.00.

by Skilled Contributor
Skilled Contributor

Re: VAT when cancelling contracts

I know how to calculate the vat, it was just what has been said on here by users

 

my bill before vat is £47.82 (was previously £44.99) so I wanted to make sure that they weren't going to try charging more for leaving early

 

you can also use the value 1.2 to determine vat

 

ie: £47.82 * 1.2 = £57.38 = inc vat

£57.38 / 1.2 = £47.82 = ex vat

 

 

by Profile closed
Not applicable

Re: VAT when cancelling contracts

Dividing the total by 1.2 is the roughly the same thing as subtracting 16.7%.

 

That’s why people quote the 16.7% figure.

 

EE will always give you the exact figure though as it’s pro-rated to daily usage.

by Grand Master
Grand Master

Re: VAT when cancelling contracts

VAT is legislated as 20% of the Net Price to arrive at the Gross Price, i.e. the price you actually pay.

 

So working backwards from the price you pay the Net Price is 83.3% (or 5/6) of the Gross Price & the VAT contained within it is 16.7% (or 1/6) of the Gross Price.

 

As you say you can also use divide by 1.2 to determine the Net Price.

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