- Sunday, April 28, 2024
The businessman behind Lycamobile has seen his company getting an unusual “disclaimer of opinion” verdict by auditors of his venture’s UK arm.
By: Shubham Ghosh
British-Sri Lankan tycoon Allirajah Subaskaran, owner of international phone call business Lycamobile, has found himself at odds with accountants after tax authorities demanded £100m from his company over alleged VAT anomalies, The Telegraph reported.
According to auditors to Lycamobile UK Limited, they were “unable to obtain sufficient appropriate audit evidence” in connection to loans amounting to £18 million the company made to Subaskaran and P Subaskaran, believed to be the former’s wife Premantharsini Subaskaran, the report added.
Besides, recent corporate filings showed that another £169 million of debts owed by an intricate network of connected party companies could not be verified either.
“These matters individually and together represent a material and pervasive issue,” Mark Ling, senior statutory auditor at PKF Littlejohn told The Telegraph.
Gavin Pearson, managing director and head of forensic accounting and investigations at Quantuma, a leading business advisory firm, told the daily “It is extremely rare for an audit report to include a disclaimer opinion, given this means that the auditors are saying that they can’t form an opinion on the accuracy of the financial statements.”
He was also quoted as saying by The Telegraph, “The issue leading to the disclaimer was that the auditors had been unable to satisfy themselves that the company would, in some scenarios, be able to collect sufficient liquidity from related party companies and directors in order to remain a going concern [to continue trading solvently].”
Subaskaran founded Lycamobile in the mid-2000s and it specialises in affordable pay-as-you-go sim cards for those who plan to make calls in the UK as well as abroad. It claims to be the world’s largest mobile virtual network operator with a customer base of more than 16 million and a new customer coming in every two seconds.
The Asian-origin businessman has also been a steady donor to the Conservative Party coffers. With a net worth estimated at £170 million five years ago, Subaskaran donated over £2 million to the current ruling party between 2011 and 2016. He also supported former prime minister Boris Johnson during his re-election campaign to become London’s mayor in 2012.
Lycamobile has found itself embroiled in a dispute with HM Revenue & Customs (HMRC). According to a Guardian report from April 2017, the business was involved in a tax dispute worth £26 million with HMRC over VAT.
Accounts filed with Companies House showed that the company’s UK division almost doubled its pre-tax profits to nearly £11 million in 2016 on turnover of £194m.
HMRC came up with demands against Lycamobile UK Limited in connection with corporate tax returns between February 2013 and December 2018 but dropped the determinations later after an appeal made by the company.
HMRC, however, has not stopped disputing Lycamobile UK Limited’s treatment of VAT. According to the company’s estimate, it could owe the taxman £105.5 million, inclusive of penalties and interest. The business’s accounts for 2021, revealed by Companies House in January, showed. In the accounts, Lycamobile’s top officials have said that they do not expect the VAT issue to be settled in the next one year, The Telegraph report added.
In June 2016, French police officers raided the offices of Lycamobile in Paris in which 19 people working for it were arrested over a multi-million-pound scandal involving tax and money-laundering.
A huge quantity of cash was seized in the raids that took place at Lycamobile’s Paris headquarters, and other residential and business addresses across the city. The group’s French bank accounts were also frozen.
