Upper Tribunal holds that VAT on mobile phone services is chargeable at the time of purchase

The Upper Tribunal (UT) has released its decision in Lycamobile UK Ltd v Revenue and Customs [2026] UKUT 74 (TCC). The case concerned whether VAT was chargeable on the supply of “plan bundles” when the bundles were purchased, or if instead they were chargeable when, and to the extent, that they were used.

For VAT purposes, sometimes the grant of a right is treated as the supply for VAT purposes and sometimes it is the exercise of the right which is the “real” supply.

The UT upheld the FTT’s conclusion that the real supply was the purchase of the plan bundles, not the provision of services when the plan bundles are used and rejected the argument that a tax point cannot arise until all the relevant information in relation to the relevant supply is known. The UT also rejected the taxpayer’s alternative argument that the voucher code was engaged.

The UT also dismissed a cross-appeal by HMRC which wrongly attempted to apply a single-supply analysis to disregard calls used and enjoyed outside the EU.

Michael Ripley, led by James Rivett KC, acted for Lycamobile, instructed by BCLP.