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UK rules on mobile phone top-up VAT

  • VAT
  • 25 January 2016 | Richard Asquith

UK rules on mobile phone top-up VAT

The UK’s First Tier Tribunal (FTT) recently clarified the rules around agents and principals, and their VAT liabilities, on mobile phone top-up cards - Phone Nation Ltd [2015] UKFTT 593 (TC)

Phone Nation purchased top-up mobile phone cards from an agent, ePay, that brokered with the major phone service providers. Phone Nation then sold on the cards to consumers or businesses. It therefore considered itself the principal in the transaction, and accounted for VAT on the full input and output elements of the transactions. This included assuming the right to offset the implied input VAT from the ePay invoices (which did not separate out VAT).

HMRC, the UK tax authority, considered that Phone Nation was not a principal, but an agent, and should only have accounted for the output VAT on its commission. It was not entitled to reclaim any input VAT. HMRC only considered the phone service providers as the principals.

The FTT agreed with HMRC in this respect. Phone Nation should only have charged output VAT on its commission, on not deducted any implied input VAT from ePay.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.