His Majesty's Revenue & Customs, the UK's tax authority, had served a winding-up petition to the High Court against Lycamobile UK on Monday.
The winding-up order is a legal process and served when a company is insolvent, unable to pay its debts. HMRC regularly deploys this petition when companies fail to pay tax bills. Such process can result in liquidation and assets being forcibly sold to generate money towards repayment of debts.
Lycamobile, founded by Eelam Tamil Subaskaran Allirajah, has often met difficulties with HMRC. In 2020, the company had 3 on-going disputes with HMRC regarding at least £60m in allegedly unpaid taxes.
Last month, a tax-specialist tribunal ruled in favour of HMRC. This dispute was regarding the value-added tax treatment of customer “bundles” that were sold by Lycamobile UK over approximately seven years. The total amount of VAT in dispute was £51m. In June, there was reports from the Financial Times that auditors PKF Littlejohn were unable to sign off the accounts of Lycamobile, as it had “not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion”.
Lycamobile is known as one of the most generous donors to the UK Conservative party. Between 2011 and 2016, it donated more than £2.1m and it also supported Boris Johnson's successful run as the Mayor of London.
Last year in France, a Parisian criminal court held that the company's French division had committed fraud with value-added tax and money laundering, fining them €10m.
Regarding the HMRC winding-up petition, a Lycamobile spokesperson stated: “We confirm that the winding-up petition issued by HMRC against Lycamobile UK Limited on Monday 12 August related to amounts that were already paid by Lycamobile UK Limited or under dispute and it appears that the petition was issued in error.
“HMRC has acknowledged that these amounts, less the disputed sums, were in fact already paid. The matter is not related to the recent HMRC tribunal ruling on VAT which will be subject to appeal.
“HMRC have indicated that the winding up petition against Lycamobile UK Limited will be withdrawn. We will continue to work closely with HMRC to swiftly conclude the matter.”
Although approached, HMRC stated it could not comment due to taxpayer confidentiality rules.
