Autumn 2006 Newsletter Contents Into The Unknown Season Of Goodwill Farewell Andre Toon Done Doon Day Of Reckoning Artistic Licence Gizmos Again A Free Lunch Sweet As Nectar Security Concerns Going For A Spin The Cap Does Not Fit While It's Hot? Code Cracking Bad Connection Broken Trusts You Can't Take It With You Dividend Returns IR35 RIP? Spam Spam Spam Breaking Up Duty Calls Time Shift Moving Vans

Bad Connection The mobile phone companies are hurting after a first opinion from the European Court on a subject very close to their hearts (or coffers). When the government auctioned the licences to operate "third generation" telephone frequencies in 2000, the phone companies believed that they would make heaps of money selling all the sophisticated new services that were possible with the new technology. Six companies paid up £22 billion for the rights. Then they found that they were not making enough to justify that, and they looked for some way to recoup some of it. They have argued that the £22 billion included VAT, and they are entitled to claim back VAT on their costs. The government said that the money was paid for a legal licence, not for a supply of services, and of course there wasn't any VAT to reclaim. No-one had thought there was in 2000, and it was just an argument put up by the lawyers to try to cash in. The Advocate-General of the European Court has backed the government, which is bad news for the phone companies but presumably good news for taxpayers in general - Mr Brown won't have to find £3 billion from somewhere to give back to the telecoms sector. Although this is a one-off, there are a couple of important points to remember here. The first is that if you agree a price for something with someone and they forget to charge you VAT, you can insist on a VAT invoice showing the agreed price as the gross amount. If you are quoting prices to customers, you should always put "plus VAT if applicable" to protect yourself. The other point is that local and national governments sometimes add VAT to things they charge you for, but generally they don't - it's usually only when they are competing in a market-place with businesses that VAT will be due on government activities.