Lycamobile is planning to lay off 90 percent of its UK workforce, according to a report in The Guardian.
The company has not responded to requests from Mobile News for a statement on The Guardian”s report that around 300 staff were informed last Friday that the EE MVNO was planning to cut hundreds of jobs, leaving a skeleton staff of around 48 people in the UK.
Lycamobile has faced significant challenges with HMRC concerning substantial unpaid VAT liabilities.
The issue stemmed from the VAT treatment of Lycamobile’s customer bundles, which include data, call, and text allowances. Lycamobile argued that VAT should only be payable when customers utilized these allowances. However, in July 2024, a tax tribunal ruled in favour of HMRC, determining that VAT is chargeable at the point of sale, irrespective of usage. This ruling applies to bundles sold over approximately seven years, with the disputed VAT amounting to £51 million.
Lycamobile has set aside £99 million to cover VAT liabilities, including penalties and interest. Additionally, the company’s auditors, PKF Littlejohn, declined to sign off on the 2022 financial statements, citing insufficient audit evidence. Concerns were raised regarding the recoverability of significant balances due from related parties and directors, as well as the completeness and accuracy of deferred income balances.
In August, HMRC filed a winding-up petition against Lycamobile UK Limited for the unpaid VAT. The petition was later withdrawn as some amounts had been paid.