Plan bundles sold by the mobile phone provider came under scrutiny after Lycamobile tried to convince HMRC that services used out of the EU were not liable to VAT and should only be charged VAT when the services were used as they were similar to vouchers.

HMRC rejected Lycamobile’s reasoning for the bundle sales being exempt from VAT.

In HMRC’s view, VAT should be charged at the point of sale, not once the purchased plan had been used and the time period in dispute stretched over seven years from 2012 to 2019. As a result, Lycamobile faced a VAT bill for £51,144,028.

From 2012-15 HMRC issued assessments totalling £6,319,980, then for 2015-17, further assessments for £19,116,953. A final two-year period was initially calculated at £26,386,932 but was reduced to £25,707,095.

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