Phone cards are VATable

The taxpayer ran a shop selling phone cards some of which were provided from another EU member state. The cards were for use in the UK and could not be used from outside the UK.

HMRC assessed the taxpayer to VAT in respect of the sales of phone cards.

He appealed arguing that under VATA 1994 Sch 10A ‘Face value vouchers’ the supply of phone cards issued by a telecoms company in another EU member state were not subject to VAT.

The VAT tribunal agreed with the taxpayer so the Revenue appealed.

Allowing the department’s appeal the High Court judge said according to the Sixth Directive if the taxpayer was not registered for VAT in any other member state he was not liable to VAT on sales of the phone cards in...