The judgement is expected to result in the first time a new UK tax law has been struck off completely.

The verdict came a week after a two-day High Court hearing on February 12.

When delivering his verdict last Wednesday Mr Justice Lightman gave the Federation of Technological Industries (FTI) permission to take its legal challenge against the Government to the European Court of Justice.

Mr Justice Lightman agreed the FTI should be allowed to explain to the European Court why it believed joint and several liability was not compatible with European VAT law.

Mr Justice Lightman said he only referred the case to the European Court on the basis that FTIs case had a substantial prospect of success.

If the European Court agrees with the FTI case it has the power to force the Government to scrap the joint and several liability VAT clause from UK VAT law.

The judge also cautioned HM Customs and Excise against applying joint and several liability to traders until the matter was finally settled by the European Court.

A reference does not of course suspend the operation or effect of United Kingdom legislation whose validity is challenged he said.

But good administration may require the greatest caution in its application in the interim period.

The FTI believes the action is a heavy defeat for the Government and is confident of a victory at the European Court of Justice.

The FTI hailed the decision as enormously welcome claiming that it had saved the industry.

Alias Dass of the FTIs solicitors Dass Jakhu said:

It gives us the opportunity to save this thriving UK industry from being destroyed. It is a powerful endorsement from the High Court.

We now expect to win our fight in the European Court of Justice. These unfair tax provisions have already substantially wrecked what was a thriving British industry.

But Customs and Excise remained unbowed and said it was confident of success in the European Court. A Customs spokesperson told Mobile News:

Customs welcome that most aspects of this case have been found in our favour. We have had (Cont P2) huge successes in cracking down on missing trader fraud in the mobile phones and computer chips sectors this year and many legitimate traders have commented favourably on the extent to which the trade has been cleaned up.

The measures on joint and several liability and security are valid under Community law and at least four other EU Member States also have joint and several liability measures. We are confident of ultimate success in Europe.

This ruling does not invalidate the measures they remain in force. Customs will continue to crackdown on fraudsters.

Chiltern Taylor director of VAT and Customs & Excise investigations Don Mavin told Mobile News:

The judge has sidestepped the issue and kicked it upstairs to the European Court. If the traders are successful in Europe it will be a momentous decision because it will reverse the Governments legislation and even remove it.

But the likely impact is unknown. Customs does not appear to have issued any joint and several liability assessments to date. We are not aware of any trader being served with an assessment for joint and several liability.

It appears Customs & Excise may have backed away from issuing these assessments. Customs still seems to be concentrating on issuing Bond House-type assessments where they believe traders have been carrying out non-economic activity.

Another tax investigator Vincent Curley who provided a key witness statement for FTIs case says the decision is positive.

Customs and Excise tried to introduce legislation to charge innocent businesses with the VAT that other businesses should have paid. The High Court has found this legislation to be unlawful.

According to Dass:

If the new law was able to stand it would be akin to taking a taxi after the previous passenger had done a runner and being charged your fare plus the fare of the last pasenger with the taxi driver saying it was the right thing to do as he would then have all the money due to him. If implemented the tax measures would have led to an increase of 20 per cent in the price of mobile phones to the public.

Dass added: The judgement is a major milestone in the Federations fight against the imposition of a tax regime that does not allow their members to trade without being at risk of carrying a completely unpredictable tax liability.

He claimed the provisions were unfair and had already substantially wrecked a thriving British industry.

When the measures were being considered in Parliament the FTI sought to persuade the Government that the new taxes would be in violation of European law but the FTIs detailed submissions were rebuffed.

Hansard records that the shadow paymaster-general repeatedly asked the Government to show its legal advice before passing the Act as there were doubts as to the new laws legality.

However the Government refused to put the advice in the House of Commons library. The Governments conduct led to the High Court action.

Appearing with Baig (38) in Southwark Crown Court this month were Mohommad Uddin (30) Aquell Ali (30) Arif Chandoo (29) and Saneed Golechhia (32).

All are variously charged with three counts of conspiring to cheat Customs and Excise between July 2000 and November 2001 and two counts of fraudulent trading.

Legal argument is currently taking place which could mean the case will not begin until June or even September. The cases could also be heard sperately.

Retail chain The Phone People went bust two years ago. It later emerged that Hutchison and City Phone had offered 4.3 million and 3 million respectively to buy The Phone People but pulled out during negotiations when they realised the extent of the complications.

Seventeen stores have been closed and stock redistributed throughout the business. Around70 staff have been made redundant.

Joint administrator Andrew Hosking from HLB Kidsons told Mobile News:

Taking these steps means the core business is protected and continues to trade. Im hopeful the core business will survive. We have had some significant expressions of interest from some corporate entities of significant size. Im confident that we will achieve the disposal of the business as a going concern.

Hosking hopes a sale will be completed next week. A consortium of dealers based in the North of the country is rumoured to be a front-runner to take over Phone People. A corporate financier with a working out of Salford is taking a detailed interest in the administration process.

I honestly dont know who is in the running said Hosking

We are dealing with this sale on a strictly impartial basis. Requests for information about Phone People are handled by a colleague in London who co-ordinates everything from there. He doesnt tell me the identities of those who have made approaches. There would still be time for someone who wants to buy Phone People to give us a call after this issue of

Mobile News has been published. They would be in with as good a chance of buying the company as those who we have been talking to for some time said Hosking.

I have been extremely impressed with the calibre of the parties who have expressed an interest thus far. If it had just been one or two companies sniffing around Id be disappointed. But we have had what I would describe as significant levels of interest. Ive been very happy and impressed by the level of support offered to us by Orange and One 2 One. A lot of Vodafone connections have historically gone through Phones 4U. They have been courteous and were in discussion about reaching an agreement.

Were also talking to RSL COM about the relatively few BT Cellnet connections we made. It is our aim to offer a company which has in place agreements with at least three of the four airtime providers.

There have been a number of difficulties. But Im optimistic about the outcome. At the moment the staff have been very supportive.

Hopefully we can save the company save the jobs and go on to bigger and better things. Fundamentally the business is sound.

The Administration has afforded the company some protection. We are straightening things out with suppliers who wouldnt supply.

Were negotiating about rents and leases. Theres every chance that well be able to restore the company to its former glory. But there are no guarantees Hosking said.

Yes Telecom MD Colin Jones confirmed that the deal he had been brokering to rescue Phone People had collapsed.

We had an equity investment in the Phone People. We found a very different financial position within the company to the one we expected. We decided there was nothing further we could do to keep funding the company said jones.

We were involved for three weeks overall. In trying to keep Phone People going we paid salaries and made some initial commitment to creditors. Im not prepared to disclose the amount in total but it was a significant sum he added.

In fact Yes is believed to have spent more than 740000 shoring up Phone People for a month paying salaries and suppliers.

Phone People Amjad Baig said Yes Telecoms statement to

Mobile News that he was no longer an executive director of Phone People was not true.

I was managing director at that point and I still am now. Ive nothing more to say said Baig.

But Andrew Hosking said:

I wouldnt want anyone to think that Amjad Baig is running the company now. His powers at the moment are effectively suspended because the administration takes priority and people trade with me.

Amjads executive powers are suspended. Hes there for background and business knowledge and sometimes hell advise us on an area of his particular expertise added Hosking.

Yes Telecom announced in February it had taken a 50 per cent stake in The Phone People.

At the time Colin Jones said:

The Phone People provides a sound commercial investment opportunity for Yes Telecom while Amjad Baig was reported as saying he looked forward to a strong partnership with people he could trust.

Yes Telecom backer Freddie Fazelynia who sold his company AAA Telecom to Vodafone for around 7.5 million is understood to be less than pleased that much of his investment has been spent on the abortive Phone People venture.

Industry sources claim Fazelynia has demanded that Jones and his team produce a plan to show how the money lost on The Phone

People can be recovered.

N-Gage is struggling because it is overpriced. Nokias ad campaign is missing the mass market. The price should come down to around 150. Nokia hasnt learned from the likes of Sony. You need to give the hardware away and make your profit on the games he says.

Unique is to distribute content from provider G7 in games packs from 2.99 upwards.

Mobile gaming will be huge. But people dont want to download games. They want to buy something that it is easy to load and use and is sensibly priced he said.

The Government has spent 3 million to set up the countrys first National Mobile Phone Crime Unit.

The unit will be launched on Wednesday (December 17) at Notting Dale police station in Knightsbridge London.

The unit has been partially operational for a number of months. But the move to permanent premises signals that it is now fully operational.

Specially trained detectives from around the country will gather intelligence investigate and arrest individuals involved in mobile phone crime from handset theft to the reprogramming of IMEI numbers.

An industry representative will liaise between the mobile phone industry and police.

Mobile phone theft accounts for between a half and a third of all street robberies. Around 700000 phones were reported stolen between 2000 and 2001.

Ormond will be in charge of all UK operations reporting to NEC Europe managing director Toshiaki Yamafuji.

Tony Hutsons role as divisional director of NEC UK is unchanged.

The appointment of Derek Ormond as managing director of NEC UK confirms NECs policy of localising senior management. His in-depth knowledge of our company and our European activities made Ormond the ideal candidate for the job. He will introduce and develop business strategies to maintain NECs leadership in the marketplace said Yamafuji.

One 2 One was worried that its rivals could have used the data in a Christmas ad campaign and took the matter to court.

Because of the court ruling Vodafone and Cellnet did not see the report until four days ago (December 10) and only then under conditions of strict confidentiality.

Its main conclusions and how Oftel intends to implement them will be published tomorrow (December 15) and the full report will be out next month.

The MMC report follows a request on March 5 from then Oftel director general Don Cruickshank to investigate calls to mobiles. One 2 One assisted and feared confidential information it provided would be seen by Vodafone and Cellnet. The Secretary of State for Industry will now decide which parts of the report are to be excluded from publication.

BT lost its argument that it should see the confidential information about One 2 One.

Throughout lengthy discussions with Oftel our primary concern has been to ensure that we are not disadvantaged because our larger and longer-established competitors have early access to information which may well change the shape of the mobile market said One 2 One policy director Robin Saphra.

Vodafone Cellnet and BT will receive just four days advance notification of the MMCs conclusions.

In the past Oftel would have released copies of the draft report to the networks to allow them to make representations to the Secretary of State about commercially sensitive information.

Although One 2 One is not actually named it did provide confidential information to help the MMC understand how the mobile market worked. One 2 One felt existing regulations did not protect this information from being passed on to Vodafone and Cellnet.

Said PocketPhone Shop managing director Simon Jordan:

We struck a deal with Kevin on the basis of implicit trust in both directions. We believe it worked well for both us and Brightpoint. However we are unhappy with the way in which Kevin has departed the company and dont feel we have the same rapport with the current management.

Members of the public were searched as they attended the Court hearing in which an application was made for five of the defendants to appear in handcuffs.

Accused are customs employee Kailash Sawhney (48) Andrew Nicholas (37) Gunsum Patel (54) Nathanial Dass (41) Ibrahim Karagozlu (41) Andreas Demetriou (34) Mehmet Karagozlu (46) and Tony Atoniou (30).

The magistrate refused the application for handcuffs and remanded the men in custody to appeal at Belmarsh magistrates court today (December 14).

Sawhney Patel and Dass are each charged with two offences of conspiring to pervert the course of justice. The other five are each charged with one offence following a joint customs and police operation involving the Complaints Investigation Bureau.