UK tribunal rules on VAT treatment on mobile phone top-up cards


The UK’s First-tier Tribunal has clarified the rules about agents and principals regarding their VAT liabilities on mobile phone top-up cards (Phone Nation Ltd [2015] UKFTT 593 (TC)).

In this case Phone Nation Ltd argued they were the principal in their transactions as they purchased the mobile phone top-up cards from an agent, who acts as a broker to major phone service providers. Phone Nation Ltd then sold these cards to their customers claiming the VAT on the purchase invoices from the agent, even though these invoices did not show VAT separately, and also accounted for VAT on the sales element of the transactions.

The tribunal ruled that Phone Nation was an agent to the major phone service providers, and would only be able to account for VAT on its commission that it obtained from purchasing and selling the cards. The tribunal agreed with the HMRC view that only the phone service provider can act as the principal.



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