Internet provider refuses VAT cut

Date: 8th December 2008

A major internet service provider has refused to pass on the recent cut in the rate of VAT.

Rupert Murdoch-owned UK Online recently informed its 30,000 customers that the company would not be implementing the 2.5 per reduction, due to "administrative work".

The decision has outraged the firm's customers, with one telling the Guardian that the move was "cynical".

The company said in a statement: "Passing on the VAT reduction would create a lot of administrative work, overhauling customer billing processes and amending direct debits and payment instructions.

"We've taken the decision to leave subscriptions at the current rate."

A spokesperson for UK Online added that the actual savings for customers would have equalled around 32p every month, but could likely be outweighed by the disruption to service.

In other news, the retailer John Lewis has announced that it sales have shown a slight rise, which the firm has attributed to the cut in VAT.