TELECOMS firm Lycamobile has been served with a winding-up petition by HM Revenue and Customs (HMRC) following a prolonged VAT dispute, reports said.
The company, which has contributed £2 million to the Conservative Party, is currently embroiled in financial difficulties, despite having generated £145m in revenue in 2022, the Guardian said.
Founded by Allirajah Subaskaran in 2006, Lycamobile is known for selling pay-as-you-go SIM cards, catering mainly to low-income workers seeking affordable international calling options.
However, the company is now operating at a loss and accounting firms expressed concerns about the lack of transparency in Lycamobile's financial records, which were frequently been filed late.
Lycamobile had a dispute with HMRC over VAT treatment on phone bundles sold to customers between 2009 and 2016. The dispute involves £51m, according to a recent tax tribunal ruling in favour of HMRC.
Lycamobile, however, has estimated that the potential financial impact could be as high as £99m.
The winding-up petition issued against Lycamobile UK Ltd is a legal process that allows creditors to force a company into liquidation if it cannot meet its debt obligations.
This petition was filed on Monday, as revealed by court documents obtained by the Guardian and initially reported by City AM.
Similar petitions were also filed against sister companies Lycatel Services Ltd and Lycamoney Financial Services Ltd, both owned by Subaskaran, a British-Sri Lankan entrepreneur who remains the chair of Lycamobile.
“We confirm that the winding-up petition issued by HMRC against Lycamobile UK Limited on Monday 12 August related to amounts that were already paid by Lycamobile UK Limited or under dispute and it appears that the petition was issued in error," a spokesperson for Lycamobile told City AM.
“HMRC has acknowledged that these amounts, less the disputed sums, were in fact already paid. The matter is not related to the recent HMRC tribunal ruling on VAT which will be subject to appeal.
“HMRC have indicated that the winding up petition against Lycamobile UK Limited will be withdrawn. We will continue to work closely with HMRC to swiftly conclude the matter.”
Meanwhile, HMRC said it is unable to comment because of taxpayer confidentiality regulations.
Eastern Eye has contacted Lycamobile UK for a comment.
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