The Daily Telegraph

Tory donor Lycamobile faces £100m bill in tax row

- By James Warrington

A MOBILE phone company that has donated millions of pounds to the Conservati­ve Party faces a bill of more than £100m in fines after a longrunnin­g tax row.

Accounts filed with Companies House show that Lycamobile, which provides pay-as-you-go Sim cards, set aside £105.5m to cover potential fines at the end of 2021.

The provision, up from £90m the previous year, relates to a dispute over VAT payments on certain phone transactio­ns between 2012 and 2021.

However, the accounts reveal that HMRC dropped two further claims against Lycamobile relating to corporatio­n tax between 2013 and 2018.

Lycamobile said the VAT dispute is under appeal, but it did not expect a resolution within the next 12 months. It added that it could access financial support from “related parties” if required.

HMRC said it does not comment on individual taxpayers or businesses.

Lycamobile, which was founded by British-sri Lankan entreprene­ur Allirajah Subaskaran in 2006, sells pay-asyou-go cards targeted primarily at migrants making internatio­nal calls.

It is a so-called mobile virtual network operator, meaning it piggybacks on the networks of larger telecoms providers. In 2015 it signed a “multiyear” deal to use O2’s network in the UK, and it has similar agreements around the world.

Lyca’s deal with O2, which has since merged with Virgin Media, is likely to be coming up for renewal. In its accounts, the company cited the continuati­on of the agreement as its biggest operationa­l risk. The accounts show Lycamobile had 1.7m users in the UK at the end of 2021, in line with the previous year but down from 2m in 2018. The company reported a pre-tax profit of £8.4m on revenues of £138m.

Lycamobile was once a significan­t donor to the Tories, handing more than £2m to the party between 2011 and 2016 and supporting Boris Johnson’s campaign for re-election as London mayor.

In 2017 KPMG resigned as the company’s UK auditor, saying it was “unable to determine whether adequate accounting records have been kept by the company”. PKF Littlejohn is now auditor.

 ?? ?? Allirajah Subaskaran founded Lycamobile in 2016. It sells pay-as-you-go cards targeted primarily at migrants making internatio­nal calls
Allirajah Subaskaran founded Lycamobile in 2016. It sells pay-as-you-go cards targeted primarily at migrants making internatio­nal calls

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