Lycamobile: can phone bundles lead to VAT blunders?

In Lycamobile UK Ltd, the FTT found that payment for a bundle of telecoms and ancillary services, which was available to the consumer for a set period, was a single supply of telecoms subject to VAT upon payment of the price rather than when the telecoms are used, as Lycamobile argued. The FTT rejected the appellant’s alternative argument that the consideration paid for the bundle of services was a voucher outside the scope of VAT until the services were used. The FTT considered a variety of issues, including questions of time of supply, the voucher rules, the use and enjoyment provisions and whether, despite a lack of a proper legal basis to do so, a taxpayer can be required to make subsequent adjustments to VAT on the full price paid for the bundle of services depending upon the consumer’s use of those services outside the EU.