Change to VAT Fees

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VAT added to mobile termination fees

On 2 September 2020, HMRC published guidance to treat early contract termination fees, including payments on a breach or withdrawal of a contract and liquidated damages, as subject to VAT.

Historically, HMRC’s published view was that payments charged to customers to withdraw from agreements to receive goods or services were not generally for a supply and were therefore outside the scope of VAT.

This affects the business mobile industry as now most payments arising from an early termination of such contracts will now be treated as consideration for a taxable supply and therefore be subject to VAT.

In considering whether payments will now be subject to VAT, HMRC has stated it is irrelevant whether:

  • the original contract has a right to terminate (previously, HMRC distinguished between contracts that contained a right to terminate and those that did not);
  • such payments are described as compensation or damages; or
  • the amount payable is equal to the amount that would have been due had the contract been fulfilled.

Only where there is no direct link between a payment and a supply of goods or services will the payment be outside the scope of VAT. We will keep you abreast of how this might affect your business mobile account.

PSTN Shut Down

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PSTN is shutting down – act now!

In 2025 the telephone network will change forever. The Public Switched Telephone Network (PSTN for short) is the traditional form of  communications dating back to the early 1900s.  The PSTN became a vast network of copper owned and operated by British Telecom.  However, as with many things, the technology has moved on.

Internet based calls and improvements in technology have made this old style of network largely redundant. It is no longer being sold and by 2025 the network is being shut off for good.

What does it mean for your business?  If you are still on ISDN or analogue lines then you will need to move your services to SIP. As this date draws nearer, there will inevitably be a high demand to switch over to this service and so it is best to be prepared and get in early. You can learn more about how Positive Business Communications can help here.

EU Roaming Charges

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No Change to EU Roaming Charges

Major UK networks have stated that no changes will be made to free roaming services in Europe now that the UK has left the European Union.

It means customers can continue to use their data, make calls and send texts in the same way they would at home while travelling around the European Union from 1 January 2021.

The statement very much reads that no changes are planned ‘at the moment’, so the situation could potentially change in the future.

Users will have the same minutes, texts and data allowances to use or they will pay the same out-of-allowance or pay-as-you-go rates when in the UK or in Europe, depending on their mobile contract. Fair usage rules still apply.

The UK Government has also created a law to create a default cap on monthly data usage for those roaming anywhere in the world. Under this cap, travellers will be protected from unexpectedly high mobile bills by capping the additional amount charged per billing period at £45.

Many of the providers have been deliberately ambiguous, given the relatively recent trade agreement, so it remains to be seen whether they change tact in the coming months.

UK Broadband coped well with lockdown

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Telecoms regulator Ofcom reported that the surge in demand as a result of lockdown has not negatively impacted broadband speeds in the UK.

During the period of lockdown, some providers had been reporting daytime traffic increases of up to 60%, mainly due to a significant increase in home-learning and those working from home. Not only did the UK broadband network cope with the surge in use, it also saw average download speed decrease by just 2% during lockdown.

More people than ever before are now able to access faster broadband speeds than they could in September 2019. The average home speed is now 64Mbps, an increase of 18% on the previous year’s 54.2Mbps.

UK broadband coverage is getting better

As of December 2019, superfast broadband (download speeds of at least 30Mbps) was available to 95% of UK homes – that’s an increase of 300,000 homes compared with September 2019.

Full-fibre broadband coverage increased to 12% from 10% between September and December 2019.

Download speeds of at least 300Mbps are available to 55% of homes, an increase of 700,000 premises in comparison to September 2019.

The rural/urban divide still remains though. Whilst urban homeowners could expect average download speeds of 75Mbps in 2019, this was just 39Mbps for those living rurally.

However, Ofcom reveals that the gap is closing – albeit slowly. 44% of rural lines had access to superfast broadband in 2018, which rose to 56% in 2019.

Choosing your mobile provider

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Choosing the right mobile phone provider is a difficult decision for any business. Not only can you utilise the networks direct, but you can also use independent providers such as Positive Business Communications. With so much choice out there, it can be more than a little overwhelming.

What do you need from your business mobile?

The main question you need to answer before deciding on your provider is what will you need your business mobiles for? If they are used as a replacement for your landline then you’ll need to consider usage and your package. If you are going to utilise them as a form collector or for employees on the road then you need to consider data usage.Knowing the purpose of your mobile phones will help you choose the right plan for your requirements, from the best deals on data to a package that offers lots of free minutes. We understand that you may need some guidance on what is best for you and so at Positive we will work with you to understand your needs and put in place a solution that fits.

Can I rely on the provider’s service?

There’s no point in signing up to a network if you simply don’t get the coverage when and where you need it. That’s why one of the most important things to check before committing to a mobile business plan is to check the reliability of the signal of the provider. We can offer a loan SIM card to test out the signal in some of the key areas of your business, to ensure that your solution will work for you.

What about the cost?

Obviously, as a business, when choosing your business mobile phone solution then cost is a big factor. You need to offset the cost versus the usability and reliability of your chosen network and the out-of-bundle costs need to be factored in.  You also need a provider who will regularly review your contract, like Positive Business Communications, so that you are never spending more than you need to and changes can be made to your account to reduce unnecessary spend.

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