Mobile Operator Lyca Mobile UK Handed Winding Up Petition by HMRC UPDATE
Troubled mobile operator Lyca Mobile, which is a virtual network operator (MVNO) on EE’s platform in the UK, appears to have suffered a blow this week after the tax authority, HM Revenue and Customs (HMRC), filed a winding-up petition in the courts against their UK business on Monday. But Lyca says it was “issued in error“.
Just for those who may be unfamiliar with this process, a Winding Up Petition (WUP) is a legal action that is usually taken by a creditor or creditors, which in this case is HMRC, against a company that owes them money. Such petitions are an expensive approach and so are usually only considered as a last resort (i.e. when all other approaches to settle a debt have failed).
The move, as first reported by City AM, comes shortly after a Tax Tribunal ruled in HMRC’s favour over a £51m (aggregate) dispute related to the VAT treatment of customer “bundles” that were sold over a period of around 7 years (here). The company’s most recent accounts (here) noted that Lyca had made a provision of £99m to reflect their current best estimate of exposure.
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The same accounts revealed that the operator, which has previously donated over £2.1m to the Conservative Party, had 1.7 million UK subscribers at the end of 2022, a churn rate of 9% and revenues of £145m (up from £138m). But they also made a loss after tax of £25.1m, which compares with a profit of £1.8m in 2021.
The accounts also included an independent auditor’s report from PKF Littlejohn, but the auditor stated that they had “not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion” (i.e. they couldn’t sign off the accounts). Much of that related to the recoverability of a due balance of nearly £150m (here).
The balance included “£105,979,000 due from related parties“, as well as “£41,704,000 due from directors and parties associated with directors” and the “completeness and accuracy of the deferred income balance of £10,870,000” related to creditors.
The development follows last year’s cyberattack (here), recent problems with 5G connectivity (here) and the conviction of Lyca’s French entities for money laundering and VAT fraud – the latter is something the operator is appealing against. Not to mention some UK customers being hit by a spate of recent and suspicious card transactions, although Lyca has strongly denied any directly related breach of their own systems.
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On top of all that, we’ve still got the outcome of the Information Commissioner’s Office (ICO) investigation into last year’s cyberattack (data breach) to come. Suffice to say that Lyca’s customers may have some concerns about the company’s future and the state of their services going forward.
UPDATE 16th Aug 2024 @ 7:11am
City AM have updated their article after managing to get a comment from Lyca Mobile, which alleges that the petition may have been “issued in error“. But HMRC tends not to comment on such things due to the rules regarding taxpayer confidentiality.
A Spokesperson for Lycamobile said:
“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.
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.”
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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Good.
A “run for the hills” moment if ever there was one. I would be porting out sharpish were I a customer.
Worse every, every month direct fails and you have to pay manually. Calls don’t come through, you get a text message to say you’ve missed a call.
Data speeds are “meh” at best saying they use EE
What’s the likelihood they transfer everyone to EE upon their demise and EE give a discounted deal like Plusnet LOL?
Unlikely as Lyca use their own number range and one with a premium interconnect rate as well. More likely that anyone who had a number from them directly loses service, even if they port out (unless the number was originally from another network and ported in).
Unlikely. Plusnet was simply a brand of BT, as is EE. Lyca is an entirely different business, with BT being just one of their many suppliers.
Awful company – truly awful customer service.
If you don’t answer them in 5 seconds they close the chat, despite the fact you had been waiting half an hour for them to answer.
Refuse to answer simple questions.
EE would sm do well to get rid and bring the customers in-house.
I’m a customer and concerned, but this is my issue who to swap to Lyca is the cheapest operator on EEs network, which is the only network with good coverage and speed locally, O2 while an option has capacity issues, Vodafone has no hope since 3G went off and Three is 3G only right now where I am
So what do I do, stay and pray, port to a “worse provider” or move to the one I have shares in which is more expensive?
I suggest 1p. Slightly more expensive but I find the data speeds to be excellent.
I would also recommend 1p mobile as they also use the EE network and I’ve had not a single issue with them over the last 4 years, can always use my referral code and bag yourself some extra credit if you sign up with it
Good riddance. Lots of potential for Lyca Mobile with amazing prices, good selection of tariffs, feature set and of course access to the EE network. Despite all this, the one thing that let them down was customer service, which in my experience is non-existent.
Remember the mess that Vectone left behind last year when they folded – if you value your number port out while you can.
City AM is stating that this Winding Up Petition was issued in error.
“A spokesperson for Lycamobile told City A.M.: “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.
“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.”
So this whole thing might indeed be a windup (mind the pun).
Was going to sign up to a Lyca SIM only deal but started hearing stuff about Lyca so decided not to.
Since the data breach my bank card has been tried multiple times in USA by all sorts of companies ranging from Walmart to Marriage Councillors. Multiple new bank cards have been ordered.
I use them as a second network on my iPhone to extend coverage in Scottish highlands and islands where I live. I am going to stick with them until the bitter end. I don’t share their number and their prices are very good.
@JimB You might not share your Lyca Mobile number with others, but Lyca seemingly may share (even if unwittingly) your payment card number and other details with fraudsters…
I left lyca after my card payment details were leaked and someone was fraudulently buying things with it.
I told lyca mobile but they were completely disinterested. The worst thing was I only used this bank card for my contract so it was definitely them and upon googling it I found out that many others had their details stolen too and cards used.
Never again they should be shut down.
Great article and hearing lyca to be dissolved. Terrible service, they throttled my data connection during n unlimited monthly data plan essentials for my business! In my opinion, serves Lyca right for their disengenguinuity!
Useless company. My husband went to them and they were shocking. They didn’t collect his DD during their computer troubles and then cut him off for not paying. Luckily I was with him when he discovered he couldn’t make any calls
We ported the very next day