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HM Revenue & Customs (HMRC) has prepared a new VAT regime aimed at stopping carousel fraud. It is set to take effect on December 1.

The new tax system called a reverse charge means that for certain
electronic goods only the final retailer will be able to levy VAT. Goods affected include mobile handsets computer chips MP3 players and USB drives.

The aim is to stop fraudsters reclaiming VAT charged on goods imported free of the tax from elsewhere in the EU.

But HMRC admits the new system will be a big headache for the legitimate VAT-registered importers and sellers of the goods.

Implementation of the reverse charge requires fundamental changes to the accounting systems of businesses trading in the relevant goods it said conceding also that the rollout offered a challenging timeframe.

As a result much accounting software will not be ready until early next year and many businesses will at first have to carry out the new accounting by hand.

The move follows a pan-European crackdown on carousel fraud that saw
the seizure of more than 30000 mobile phones at Frankfurt airport and on the German-Swiss border and the establishment of the HMRCs Nemesis database to register all imported and exported mobile phones.

The fraud is estimated to have cost the government GBP8.5bn since 2001. In 2004/05 HMRC estimated it lost between GBP1.2bn-GBP1.9bn and the losses for the 2005/06 tax year are expected to be much higher.

The implementation of the new regime will depend on final authorisation from the EU Commission.

Ora will become Brightpoints UK partner and services provider and will apply the management systems used at Brightpoint.

The alliance which is currently being finalised will focus primarily on the UK market. It will enable Ora to offer a wider range of products and value-added services to its current UK and international customer base and to new accounts. The expanded range will encompass both handset fulfilment and new product technology.

Brightpoint says it last year sold over 20 million handsets to 20000 customers worldwide. The company claims to be Nokia and Ericssons biggest customer and has 32 locations in 18 countries worldwide.

The UK market is critically important for Brightpoint. This new partnership will enable us to extend our successful European capability and build relationships with UK customers through Ora. said Brightpoint chief executive officer Paul Fanelli.

Ora chief executive Ken Jacobsen added: Our partnership with Brightpoint will enable us to offer significant new benefits and high-quality services to existing customers. It will also create a highly competitive basis for Oras continued international expansion programme.

Brightpoint originally entered the UK market in 1995 but packed up four years later after spending 8 million buying Ericsson distributor Wavetech in 1998. The UK closure followed disastrous losses made by its UK trading division which was closed down in 1998. Brightpoint was never able to make up the lost revenue.

BT has launched a fixed-mobile convergence service for large organisations. Called BT Corporate Fusion it aims to ease the way for corporate clients to deploy fixed mobile IP telephony and WiFi telecoms coverage.

The first UK trial is under way at two locations of Leeds City Council which has the largest in-house ICT provision of any local authority. The aim is to cut telecoms costs as it estimates more than half of staff mobile phone calls are made within its offices despite the fact that cheaper fixed-line phones are readily available.

Council employees will use a dual-mode mobile phone that incorporates both regular GSM and additional WiFi connectivity. Within council premises calls made from these mobile phones are connected via WiFi access points and are routed over existing fixed-line infrastructure.

Leeds City Council head of ICT Operations Adrian Fegan cited cost-cutting and better responsiveness by staff as key reasons for uptake. He said: We believe using a wide range of tecfhnology allows us to serve the citizens of Leeds in the most effective manner possible. We see BTs Corporate Fusion service as an extension of that approach and an important part of our future overall voice strategy.

BT Chief of Converged Communication Services Steve Andrews added that the launch was another step in BTs Fusion roadmap which aims to offer a wide range of communications technology with one customer experience.

BT will announce details of mobile handset strategic suppliers in the coming weeks. The service will initially be launched in the UK and Italy in early 2007 followed by a phased international roll-out in Germany Benelux Spain and France.

BT has signed an agreement with Chinese telecoms equipment supplier ZTE to develop a 3G mobile handset compatible with BT Movios wholesale mobile entertainment service.

The BT Movio platform offers broadcast mobile TV and digital radio using DAB technology as well as a seven-day programme guide and red button interactivity. The agreement follows the commercial launch of BT Movio in the UK early this month.

BT Movio managing director Emma Lloyd said: With the introduction of the first 3G mobile device capable of supporting DAB-IP we will be in a strong position to extend the BT Movio wholesale proposition to 3G mobile operators in the UK.

BT Movio claims to be able to deliver services via any IP-capable bearer be it broadcast or point-to-point offering flexibility spectrum availability varies from market to market. ZTE will develop and supply a range of compatible handsets.

ZTE UK managing director Frank Bai said: We see this as the beginning of a strong partnership.

Orange distributor Mainline Digital Communications has served 28-days notice on three dealers who operate outbound call centres for failing to comply with the networks procedures on distance selling.

Oranges guidelines for distance sellers include the use of an approved script voice recording of all calls and the ready availability of a customer service number.

Mainline has set up a compliance programme to help distance sellers and protect the interests of Orange.

It has drafted telephone and text messaging scripts which have been approved by Orange and can be tailored by dealers. Mainline also holds copies of two sample voice recordings on file from each dealer one of a successful connection and one of sale that resulted in a disconnection. Calls are analysed and guidance is provided on how to maximise the former and minimise the latter. Mainline also ensures that dealers have customer service number and complaints procedures are in place.

Mainline head of marketing Gail Hollinshead said: Orange has drawn up a number of criteria that dealers should follow. Our programme entails collating information from our dealers on their current level of compliance and then helping them to achieve full compliance.

She added: The vast majority of dealers are aware of Oranges interest in this area and are keen to maintain a positive working relationship with the network. However there are several who are dragging their heels and whose business with Orange and with Mainline is at risk as a result. We hope they will use the 28-day notice period to work more closely with us and give themselves the best possible chance of retaining their distance selling business.

The freely downloadable application called Viper enables mobile users to make calls through a PC or laptop via Bluetooth. Viper is available through ROKs website and is compatible with any handset that runs the Symbian Series 3 operating system including the Nokia N70 and 6680 handsets. A spokesman for the company expects to be compatible with over 100 handsets by year-end. Java and Windows versions will also be offered.

Calls to Viper users will be free but calls to non-Viper handsets will be up to 3p a minute. This means roaming charges that can run into hundreds can be cut to just a few pounds the spokesman said.

Sunday Times Rich-Listed ROK chief executive Jonathan Kendrick explained that he hopes to have 20 million users world-wide by the first quarter of 2007. When users are calling non-Viper handsets we will take a small margin of the call charge he said. Otherwise we will be building a user base to promote other ROK products.

MPRC was acquired by private equity firm Doughty Hanson along with the Caudwell Groups distribution arms 20:20 Logistics and Dextra Solutions. All units will be brought together and renamed the 20:20 Mobile Group.

MPRC is in the process of moving from its base in Newcastle-under-Lyme to 20:20s premises in Crewe. The relocation has seen product returns increase from four-to-five days which is its standard to 10-15 working days.

MPRC has opened up a retail store near to its original base to enable consumers to walk in and drop phones off for repair following the move to Crewe.

MPRC repairs around 9000 handsets per week. It has recently been licensed by Apple to repair iPods and has won a contract to carry out iPod repairs for Argos.

A 20:20 spokesman said: Any hiccup is short-term and will ultimately lead to a streamlining of the processes and a better service to dealers and retail. It will enable MPRC to broaden its capabilities and attract more business.

Repair companies face increased cost pressures as manufacturers have further reduced the amount they pay for repairs to their phones.

DLA Pipers Group Litigation Order (GLO) against HMRC which was approved by the High Court in July will challenge HMRC for VAT that is still being withheld from mobile phone and CPU traders on the basis of ?non-economic activity a HMRC policy that was defeated in the Bond House case in January.

Around 150 traders still have VAT withheld by HMRC on the grounds of non-economic activity.

HMRC introduced its extended verification policy following the Bond House defeat in the ECJ to withhold VAT repayments while it investigated VAT fraud in a supply chain. Traders are now considering suing HMRC for damages via judicial review in the administrative court on the grounds that the decision to engage in extended verification or the time taken to carry out the process is unreasonable.

DLA Piper is considering incorporating claims for damages under extended verification in its current GLO which would significantly increase the number of claimants and the size of the claim.

DLA Piper solicitor Simon Airey said: We are considering whether and to what extent the extended verification policy can also be used to justify claims and damages.

Around 50 traders have so far registered interest in the GLO. Traders have six months to join the class action.

Both 3 and Data Select played down the move.

3 restated its campaign to clamp down on fraud and bad debt last month following unremarkable half-year results that showed high churn and below-average ARPU. 3 has increased the rigidity of its credit-checking system and is monitoring its distribution channels more closely.

Eric White group marketing manager at Data Select parent company Phones International said:

Data Select is working closely with its network partners to achieve the highest possible quality of connections. Our focus is to manage dealer relationships as diligently as possible and review their connections activity on an ongoing basis to ensure they meet the quality requirements set out by the network. This is simply day-to-day business as usual.

Where issues are identified we will work with the dealer to try and get them back on track assuming the inclination and enthusiasm is there on the dealers part. As a result of this process we have recently ceased trading with a handful of dealers who operate in the distance reselling marketplace and who do not meet these standards.

A 3 spokesman added: The move ties in with the strategy we outlined last year. All of our channels and partners are reviewed on a monthly basis to investigate the type of business they are putting through.

One distributor source said: This goes on week-in week-out. The networks want better quality and they have moved to cut out the bad dealers. They are evaluating it all the time.