PhonepayPlus’ response to decrease in VAT

The announcement by the Chancellor of the Exchequer of a cut in the rate of VAT from 17.5% to 15% on 1 December has prompted a number of questions to PhonepayPlus. These centre upon two main issues; pricing information and the split of revenue between Networks and contracted parties.
With regard to pricing it is clear that, depending upon the action taken by individual billing networks, some users of services may now pay slightly less that the advertised rate for a call. For instance, following BT’s statement that they will be passing on the benefit of the reduction to customers, a 50p drop charge call will now cost BT customers 48.9p.

Whilst we are keen to ensure pricing transparency, we are equally keen to ensure that users of services are not confused by the information provided to them. Given the minimal risk of consumer harm that could arise in such a situation following a small price decrease, we will not be expecting promotional material to be amended to reflect this type of change and can confirm that no action will be taken against service providers in these circumstances.

If service providers do wish to reflect the change, we would suggest that wording be amended to indicate that calls will cost ‘no more than’ the relevant amount. Where currently stated that ‘calls cost 50p from a BT landline,’ we would suggest an amendment to ‘calls cost no more than 50p from a BT landline’.

With regard to the sharing of any potential increased revenue from services, this remains a commercial matter for the parties involved and PhonepayPlus will not be issuing any guidance on this issue.