VAT implications of mobile phone allowances: Lycamobile case highlights point of sale vs. point of use.

• Lycamobile provided ‘Plan Bundles’ of mobile phone services to customers in the UK
• Customers may not use their full allowances by the end of the contract period
• Lycamobile argued that VAT should only be paid when customers use their allowances
• HMRC challenged this and argued that VAT should be paid at the point of purchase
• HMRC issued three VAT assessments totaling £51m
• Lycamobile appealed to the FTT
• FTT determined that VAT should be paid at the point of sale for the Plan Bundles
• Decision could impact Lycamobile’s business and other mobile network operators
• Decision provides helpful discussion on the nature and timing of a supply for VAT practitioners.

Source: rpc.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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