Lycamobile went to the Upper Tribunal to appeal a decision handed down at the First Tier Tribunal in 2024 over VAT liability for bundled charges sold to customers, arguing that VAT should only be charged when and if allowances were used.

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

In a long running dispute dating back more than 12 years, 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. The dispute stretched over seven years from 2012 to 2019, and HMRC asserted that Lycamobile faced a VAT bill for £51,144,028.