Ethnic MVNO saves millions of pounds as European Court of Justice rules against HMRC over payment of two lots of VAT
Lebara Mobile has hailed its landmark VAT victory against HM Revenue & Customs (HMRC) last week as a “significant achievement.”
HMRC had said Lebara should pay two lots of VAT on international calling cards to international distributors – once for the sale of the card and again when the card was activated by the end user.
However, Lebara argued it was only engaged in business with the distributor and not the end user, meaning it should pay just one lot of VAT.
The European Court of Justice (ECJ) this month agreed and ruled against HMRC, saving the MVNO millions of pounds.
Lebara said the decision will help to protect similar companies against additional VAT costs.
The ruling could now result in a number of companies seeking a rebate from HMRC.
A spokesperson for Lebara said: “Lebara welcomes the ruling of the Court of Justice of the European Union in favour of the company’s interpretation of VAT law.
“This hearing and final decision arose from Lebara’s concern that existing UK VAT requirements imposed by HMRC were not consistent with European VAT legislation.
“The judgement confirming Lebara’s interpretation of VAT law is a significant achievement for the company.
“It will protect other similar business models from effective double taxation and allow the company to concentrate on future growth that will provide extended tax revenues to HMRC.”