Everything Everywhere loses £4m VAT dispute

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Everything Everywhere has lost its appeal with the HMRC for a £4m VAT refund after the courts ruled additional charges for non direct debit customers are not tax exempt

The European Court of Justice (ECJ) yesterday rejected the claim by Everything Everywhere brand T-Mobile the additional £3 charged to customers for settling bills without a direct debit should be exempt from VAT.

The case relates to charges made by T-Mobile to its customers in the two years ending July 2005. Everything Everywhere had requested the VAT for these fees be returned.

The EJC  said the £3 charge was not a “payment handling service” and was instead an additional charge for the principle supply of mobile phone services.

A spokesperson for Everything Everywhere said: “Further to the recent ruling from European Court of Justice, Everything Everywhere is reviewing the decision and considering its options.

“As all VAT has been paid when it was due, there is no additional VAT to be paid as a result of this decision.”

Grant Thornton UK LLP head of London VAT Karen Robb said: “The Court took the view despite this separate charge, that there was no separate supply of payment handling services to the customers.

“As a result, the additional payment has to be regarded as part of the main price of the telecoms services and be subject to VAT at the standard rate. The cost to Everything Everywhere will be significant.”

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