Staff Reporter

John McCann of Tel-ka exclusively told Mobile News: In October 2001 HM Customs and Excise withheld some 2.4 million of VAT due to us promising that it would give us a legal basis for its actions at some point in the future.

These actions were in respect of missing traders and uneconomic activity surrounding one piece of business wed concluded.

As a result the business we had is no more. HM Customs and Excise has destroyed it and the livelihoods of everybody involved.

Eight people lost their jobs at Tel-ka which used to be a thriving business and had been trading successfully for five years.

We did everything right by Customs and Excise. We invited them in every month on the basis that theyd help us to identify any potential problems. We took that precautionary approach to protect ourselves said McCann (full story P18).

Ammar Hussein (36) who worked at Westbourne Grove Communications is charged with unlawfully tampering with the IMEI of a Nokia 3310 last July.

He has been remanded on bail until July 27.

Hussein faces three similar charges of doctoring other phones at the shop once on August 12 last year and twice a week later.

District judge Michael Snow said the case was so serious it should be dealt with not by the Magistrates Court but by the Crown Court which could impose the maximum penalty of up to five years imprisonment an unlimited fine or both.

Tampering with IMEIs became an offence under the Mobile Telephones (Re-Programming) Act.

This Act which came into force on 4 October 2002 was a key measure in the Government and industrys strategy to make stolen phones of little use or value.

It is the second time this has happened this month.

The e-mail entitled Hardware Returns was sent from O2 channel support to 250 dealers and distributors. One recipient replied and sent a virus that replicated the originating O2 e-mail address.

As a result dealers received between 200 and 20000 junk e-mails that appeared to be from O2. The virus created a spoof e-mail address that resulted in a string of repeat e-mail messages being sent to all of the recipients of the original e-mail back to O2 and out again.

Smaller independent dealers say they lost business as a result of their systems crashing and being inaccessible.

We turned the computer on in the morning and there were 15000 e-mails in the inbox said DM Telecom director Justine Halliday. It took four or five hours for them all to get through. They just kept coming. In the end there were 20000.

We had to shut the server down in London and block everything. We had to delete every e-mail from that day. We lost 250-odd messages in the end and we dont know who they were from so weve potentially lost business because of it.

For larger businesses with more resilient IT systems in place (Cont P2) the deluge of junk mail was a nuisance.

We had a few thousand come in. But we saw it was spam at a very early stage said Paul Butler chairman of Axxent Voice and Data Communications.

In the end only a few hundred got beyond our server and into our e-mail accounts because we put a block on it. It happened again a fortnight ago but it hasnt had a massive impact because our server and systems are pretty resilient.

O2 was actually very good. It told us to block the e-mail address and promised it would not use that e-mail address again. But its the nature of the Internet – the plague of e-mail. You cant stop it. Its just a pain in the neck.

Avenir got more than 200 of the rogue e-mails.

Exactly the same thing happened a week later – hundreds of e-mails that appeared to be from O2 addressed to its entire channel distribution list said Jake Carby marketing coordinator at Avenir.

They came through in a very short timescale. It was a nuisance but didnt cause me to lose any work nor did it affect my PC.

Last week O2 sent its dealer channel an e-mail in explanation:

You may have been impacted by our e-mail communication titled Hardware Returns that we sent on Friday 11 June 2004. One of the e-mail recipients responded to the e-mail and unfortunately it contained a virus.

O2 experienced the same problems as its dealers. A spokesman said:

It was extremely irritating. We had lots and lots of multiple e-mails come through our end too and lots of enquiries from the channel flagging up the problem to us.

But the process weve got in place to communicate with the channel is well established and works very well so it hasnt affected the ongoing process.

We removed the infected e-mail and changed the channel communications e-mail address to avoid further complications.

That is when the test case between Bond House and HM Customs and Excise over the definition of non-economic activity for VAT purposes is to be decided by the European Court of Justice reports Ian White.

The Bond House case is to be fast-tracked through the European Court by November.

Bond House one of the countrys biggest international resellers of computer chips hit the headlines when its May 2002 VAT return was selected by Customs and Excise as a test for a new legal argument of non-economic activity.

More than 13.5 million in VAT repayments were initially withheld from the company.

There have been suggestions that the Bond House case would drag on for four years at the European Court. These suggestions are incorrect. We are likely to have a hearing date by November said Bond Houses lawyer Hassan Khan.

Khan who is head of the Civil and Tax Group at Customs and Excise legal specialists Bark and Khan LLP estimates Customs is withholding around 700 million in VAT refunds and assessments in actions against around 50 traders.

He said the Bond House case has put Customs and Excise in a no-win situation.

If Bond House wins then Customs will have to pay back all the sums they are withholding from traders and withdraw many of the tax assessments now issued.

If Bond House loses Customs will have to revisit all supply chains and refund the output tax paid by traders since according to Customs own case it was not tax arising from economic activity.

Khan (rhkhan@barkco.com) is holding free seminars to update traders on the future VAT trading environment for phone- and chip-reselling. They will be at the Law Society in London on July 5 and on July 8 at a Manchester Airport hotel.

Sources claim that Jackson wants out of service provision and is talking to advisers. But Intercity press spokesman Bob Keys denied this.

I can say categorically no advisers have been appointed or approached by Alan Jackson or any of the other directors. Mr Jackson has absolutely no intention of putting Intercity up for sale. He is quite comfortable and satisfied with the companys performance.

Intercity describes itself as the UKs largest independent cellular service provider with nearly 60000 users and an annual turnover of more than 50 million.

The company has no dealer base but sells equipment direct to companies.

Jackson is one of the wealthiest men in the Midlands with a fortune estimated at around 75 million.

He started Intercity Mobile Communications in 1985. The company provides services to its UK corporate customers from its offices in Birmingham and London. Intercity also provides communication services to Europe from its offices in The Netherlands.

The viral ad (www.best-hands.net) will only be available on the Internet and was created to celebrate Virgin Mobiles recent JD Power award for best customer service. It shows a toilet attendant taking his duties to the next level by providing a hands-on service in the most literal sense. It ends with a hugely obese man entering a cubicle with the now grim-faced attendant following behind with a large toilet roll. Viral ads aim to get a brands target audience to send them out to their friends creating a chain reaction.

Rigby reported to Vodafone director of corporate and business sales Ken McGeorge. Alternative Networks has been one of Rigbys accounts for the past three years.

Ive loved every second of my time at Vodafone Rigby said. But Ive been offered an opportunity at director level at a smaller company. So Im moving out of a large corporate entity to something that is more fleet of foot.

He went on: It was important to me to leave Vodafone with all my relationships intact and Im delighted to say this has been done.

Listed in the 2000 2001 and 2002 editions of the Sunday Times Virgin Atlantic Fast Track 100 league table Alternative Networks claims to be one of the UKs fastest growing companies. It provides telecoms services for around 3000 small firms. 

The company which has offices in London Manchester and Bracknell was founded in October 1994 by friends Chris Wilson and James Murray and is described as Britains largest independent reseller of telecommunications services.

In 2002 it won the National

Business Award for being the UKs top growing company.

At the time of going to press nobody from Alternative Networks was available to discuss the specifics of Rigbys new role.

Ttg Europe has been chasing the refund for nearly a year and the issue is to go to a VAT Tribunal on July 17 according to group marketing director Ross Sampson.

The retention of the VAT money means Phone Direct is currently dealing at around a third of its usual 3 million trading pot.

TTG is considering a new share issue to raise funding to help Phone Direct.

A TTG trading statement said:

Uncertain conditions caused by the concerted attack by Customs and Excise on the bulk trading market in mobile phones has made progress more difficult in this area of the business. The outstanding VAT repayment of 2.4 million has still not been received and this together with settlement of the 4 million Roxspur pension issue has put a further strain on working capital. Due to these constraints bulk trading has been greatly reduced and cannot resume its previous levels without an additional injection of capital.

Roxspur is the dormant shell that bought Anglia and Phone Direct in a cash-and-share-swap deal last October.

TTG telco subsidiary Anglia Telecom continues to trade in line with budget. Anglia chief executive Andy Smith told Mobile News:

Anglia Telecom although asubsidiary of TTG Group remains profitable and generates enough cash to fund its business. This is not a loss-making business.

Vodafone has come under fire from independent dealers lately for not offering commission rates in line with Orange and O2.

Martin Gebbett sales director of Brighton-based Autocall said:

Its about time Vodafone put its foot back in the water. O2 and Orange are playing the game so of course they look more attractive from the dealers point of view.

Vodafone can come up with good propositions for the end user but thats not enough. It has to be of benefit to the dealer or it will lose to the networks that are prepared to pay.

Dino Maroudias managing director of DM Telecom said:

By not offering commission rates in line with Orange and O2 Vodafone seems complacent but in fact it is buying the market around everyone.

O2 and Orange are throwing money at us to win market share. Vodafone can buy up a service provider and acquire thousands of customers.

A Vodafone direct dealer who wished to remain unnamed said:

Vodafone isnt moving with the times. The other networks are pushing the independent channel.

They are making the commission rates really attractive. Orange is offering an extra 75 100 or 125 to get the connections. O2 has Share Your Commission.

Vodafone isnt doing anything. If it doesnt make it worthwhile the other networks will get the sales.

A Vodafone spokesman said: We are currently undertaking a review of all dealer remuneration.

The manufacturers who have pledged to close the loophole to IMEI crackers are Alcatel NEC Sony Ericsson Panasonic Siemens Nokia Motorola and Sagem.

At the same time the GSM Association is holding talks with operators worldwide to produce a global register of stolen phones to prevent the re-use of stolen handsets anywhere in the world.

This commitment by manufacturers together with the continued extension of the GSMAs handset database are critical elements in tackling the problem of handset theft but they are only part of the overall solution said GSM Association CEO Rob Conway.

He went on: We would like to see a more comprehensive approach that includes additional Government-led action such as we have seen in the UK.

Phones 4U and The Link were among the winners of Oranges Freedom Incentive Awards.

Other winners were M-Viron Go Mobile A1 Comms Mainline Mobileshop.com Telecommunications Direct JAG Communications Connection Centres and The Communications Centre.

The Incentive Awards are designed to reward sales performances of Orange staff between November and February.

Prizes were also awarded for sales of Oranges WAP portal Orange World sales of the Panasonic X70 and connections to Oranges Your Plan 120 tariff.

Staff respond well to the incentives. We are set to exceed forecasts in nearly all areas for this period said Orange promotions manager Simon Gilbert.