TaxCorporate Tax£3.5bn VAT rebate moves step closer

£3.5bn VAT rebate moves step closer

The five UK mobile operators that invested £22.5bn in third generation (3G) licences moved a step closer to clawing back £3.35bn of that outlay through a VAT rebate.

Link: Mobile operators set for VAT dogfight

The case has been referred to the European Court of Justice after a VAT tribunal highlighted six points that needed clarification by the European court.

The UK government’s argument centres around the assertion that a public body could not be involved in an economic activity, meaning that VAT would not have been paid.

However the UK’s five 3G licence holders – Vodafone, O2, Orange, Three and T-Mobile – are arguing that the auction was conducted in a commercial capacity and therefore VAT would made up part of the overall £22.5bn cost, meaning it could be reclaimed.

‘The meaning of the word telecommunications could decide this case,’ Paddy Behan, a VAT specialist at Grant Thornton told The Financial Times. ‘If the operators’ definition is accepted by the court, it is hard to see how they could lose.’

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