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Items not subject to VAT

I see BT have increased the net line rental for residential customers.  As an employer paying their employees bills I noticed that there was line rental charges not subject to VAT on the October bills and when I queried this I was told that BT are only allowed to charge VAT on their lowest line rental cost which is the line rental saver of £11.75/month.  Therefore the £3.70 difference between that and basic line rental is not subject to VAT.  Because these are VAT inclusive figures this effectively means an increase in net line rental cost.  Sneaky 

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