Place of supply issue at stake in Hutchison case

Round one in an interesting and potentially long‑running litigation concerning the communications supplies has commenced with the taxpayer losing to HMRC in the First Tier Tribunal in Hutchison 3G (TC06519), concerning mobile phone calls made outside the EU.

Customers purchased a package of credits for telephone calls covering a period of time, which could include calls made abroad. Under the use and enjoyment provisions, the place of supply of the telephone use outside the EU is regarded as falling outside the scope of UK VAT. All other uses are subject to UK VAT. However, customers are charged upfront for their package, and it is not then known how much of the supply will arise outside the UK.