TaxCorporate TaxMobile phone giants suffer £3.3bn VAT loss

Mobile phone giants suffer £3.3bn VAT loss

ECJ blocks attempt by Vodafone, Orange, 02 and others to claim back tax on 3G licences

vodafone

Mobile Phone giants, including Vodafone and Orange, have failed in their
attempts to claim back £3.3bn in VAT for money paid to UK regulators for 3G
licenses.

The challenge by the mobile phones groups had gone all the way to the
European Court of Justice, which today ruled that the groups should not be able
to claim back the VAT as money paid for licenses did not constitute economic
activity.

‘The Court points out that only economic activity is subject to VAT. The
Court holds that the allocation, by auction by the national regulatory authority
responsible for spectrum assignment… does not constitute an “economic activity”
,’ the ECJ said.

The UK government raised £22bn from the auction of 3G licenses, which enabled
the successful bidders to offer video and internet through mobile phones. Other
EU countries have followed the case closely as there are similar issues in these
territories.

The mobile phone groups, including Vodafone, Orange, T-Mobile and 02, had
argued that because customers were the ultimate beneficiaries of the licenses
they should be allowed to recover VAT.

It was highly unlikely that the mobile phone groups would win the case, after
the advocate general gave an opinion against their case in September last year.

Further reading:


Read the judgment

3G protests fall on deaf ears at ECJ

Related Articles

‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

2w Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

1m Emma Rawson
R&D incentives: How businesses can reap the rewards of innovation

Corporate Tax R&D incentives: How businesses can reap the rewards of innovation

2m Sam Swansborough
Q&A with the Financial Secretary to the Treasury

Corporate Tax Q&A with the Financial Secretary to the Treasury

3m Emma Smith, Managing Editor
Guide to the UK corporate tax system

Corporate Tax Guide to the UK corporate tax system

3m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

2m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

Corporate Tax Does the Taylor Review sufficiently address the gig economy?

3m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

3m Emma Smith, Managing Editor