Sky, meet HMRC

Well, I know this is supposed to be an affiliate blog, but my dealings with Sky over the past few days really have wound me up to the extent that I’ve felt compelled to write on here. Not wound me up so much that I’m all annoyed, and consumed by it, but wound me up in that I can’t believe a company can like that can act so irresponsibly.

Now, the VAT rate went up from 17.5% to 20% recently, and most companies have adopted the change in some manner or form, with most just changing their prices so that they reflect the new rate.

However, Sky seem to have taken it upon themselves to add a stealth price increase at the same time too. My usual Sky package is just £20 a month (@ 17.5% VAT), which as a net amount is £17.02. Understandably, with the VAT going up, you’d expect to pay more, so I was expecting to be billed £20.42, which is how my direct debit payment should have looked.

Sky however, have taken the VAT increase into their own hands. The exact wording on their website is.

UK VAT increase from 17.5% to 20% effective from 4th January 2011.

As a result, UK subscription prices will increase by approximately 2.5% - to keep pricing simple the prices on all UK TV Packages and some Products will be rounded up or down to the nearest 25p.

Ok, so Sky are trying to be helpful, or are appearing to be. It all sounds fine in that some will be rounded up, and some will be rounded down, so Sky should end up being no better or worse off, and neither should the tax man. It doesn’t seem to work like that though – every friend and relative that I have spoken to that has Sky have exactly the same rounding up issue, which means Sky are getting approximately an extra 8p per month, per subscriber. Not a lot, but cumulatively….

Sky have blurted on about the fact that they are nearing, or have passed, the 10 million subscriber mark in 2010. Assuming Sky are getting an extra 8p per month, per subscriber, that’s nearly an extra £10,000,000 a year. There may be actually some refunds in there too, where they have rounded down, but I feel that’s pretty unlikely based on the law of averages from asking around. Ten million quid. Wow. I’m sure the tax man will love that little bonus that Sky are going to pass on to him. I’m sure.

Contacting Sky

My first port of call was to contact Sky, through their online help system. I put in my query, and asked 2 questions. The first being, whether Sky would actually be passing on the extra 8p to HMRC, and then when would they be correcting my account so it was only £20.42, not £20.50.

Sky surprised (or rather, didn’t surprise) me, with their response which was a pure copy and paste of their website, and a single quote – “Whilst I realise that you may be disappointed with the decision made, I hope that you can appreciate our position on this matter.” What position? What matter? They seem to have just ignored anything that I asked!

So, another email in response sent back to Sky, asking them to re-read my initial email, and answer the damn questions!

2.5% is 2.5%, Right?

I checked my email this morning, after replying in the early evening yesterday, and found that Sky had just responded. Maybe they were getting their act together and giving me a proper answer?

Thank you for contacting Sky Help Centre.
Regarding your enquiry about the price increase ,this increase is due to the V.A.T rise . The increase of 2.5 % makes your subscription price £20.50 G.B.P ,from £20.00 G.B.P this equates to a subscription increase of 50 p .
I hope this helps with your enquiry
Kind regards

No, it doesn’t really help with my enquiry. All it says to me is that Sky are incapable of doing their accounts, and cannot work out that an increase of 2.5% in the VAT rate does not entitle them to increase the cost of their services by 2.5% as a result, without first giving me a 30-day notification of a price rise! Grr!

Where now?

Although the response from Sky is technically correct, as a 2.5% increase on top of £20 IS 50p, a 2.5% increase in the pre-VAT amount is actually only 42p.

The saga continues… Will Sky refund the 8p? Will HMRC care less? Tune in next week to find out more!

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