Lycamobile has given Conservatives more than £300,000 in last nine months, but has paid no coporation tax for three years

Much of Lycamobile's recent support was for the re-election campaign of Boris Johnson, who has praised the company publicly. Photograph: Julian Makey/Rex Features

A mobile phone company that has paid no corporation tax for three years has become the Conservatives‘ most generous corporate donor after giving more than £300,000 over the last nine months, new figures show.

Lycamobile, an £88m company based in Canary Wharf, gave more than £130,000 in donations between January and March this year, the latest Electoral Commission records show. This was on top of previous donations at the end of last year.

Insiders from the company have confirmed that most of the last quarter’s money was spent on Boris Johnson’s successful campaign to be re-elected as London mayor. Johnson has publicly praised Lycamobile’s sim cards and mobile telephone technology, and the company’s founder, Subaskaran Allirajah, has attended Tory party fundraising events with David Cameron.

According to the Electoral Commission figures, Lycamobile gave the Tories £34,350 cash and £97,262 in “non-cash sponsorship” between January and March.

The latter is believed to be the use of the company’s offices for telephone canvassing. The Back Boris website shows that the campaign team called for volunteers to attend Lycamobile’s offices on at least five occasions..

Johnson lavished praise on Lycamobile at the company’s fifth birthday last July, telling journalists it was as dynamic as London itself and joking that its technology was “unhackable”.

Executives from the company also attended Ken Livingstone’s fundraising events and discussed donating £100,000, but no money was handed over.

The latest available figures show the company did not pay any tax between 2008 and 2010, despite generating a turnover of between £47m and £88m.

Lycamobile’s recent donations were accepted by the Tories on 19 March, while the company was under threat of being struck off by Companies House for failing to register its annual accounts. The move was suspended five days later following an intervention by the company.

The accounts are nearly two years late, but were filed last week, according to a spokesman. They have not yet appeared on the Companies House website. Lycamobile has said it did not pay taxes because it was “growing the business” and therefore had not generated taxable income.

A spokesman said the company had paid all taxes due. The delay in publishing this year’s accounts was, he said, a result of a “very thorough” audit by Ernst & Young. The company said it had generated and paid taxable receipts in the UK for more than £54m in VAT as well as national insurance and PAYE contributions.

“We are pleased at the progress we have made both in gaining market share leadership and in terms of profitability, which will be reflected in the accounts. These tax losses are able to be carried forward and offset against future taxable profits,” the spokesman said.

Lycamobile is a mobile virtual network operator (MVNO). It was launched in 2005 and has companies in Australia, Belgium, Denmark, France, Germany, Italy, Netherlands, Norway, Poland, Spain, Sweden, Switzerland and the UK – and recently launched in Australia. It is part of the Lyca Group of companies, which has around 60 different entities in Europe and Asia.

The Australian Communications and Media Authority (ACMA) issued Lycamobile with a formal warning earlier this month for breaching the country’s Telecommunications Act. The authority found that the pay-as-you-go company had failed to provide accurate customer records, which contain listed and unlisted public phone numbers used for emergency calls and law enforcement.

Allirajah controls another company, Lycatel, which sells cheap international phone cards. Between 2008 and 2010 Lycatel had a turnover of £260m, but again paid no tax.

Cheap international calls are big business, as low-paid migrant workers look for the best rates to phone home.

In July, Lycamobile issued an advertisement claiming: “Call India, Pakistan and Bangladesh landlines for only 1p a minute.” The Advertising Standards Authority banned the ad for playing down the fact that rates increase after 15 minutes. In February, the company faced censure for issuing leaflets offering “1/2p a minute” international calls.


Powered by Guardian.co.ukThis article titled “Tories’ third largest donor is company that paid no tax for three years” was written by Rajeev Syal and Solomon Hughes, for The Guardian on Monday 23rd April 2012 18.19 Europe/London

A company which is one of the Conservative party’s largest donors paid no corporation tax for three years and could be dissolved by Companies House for failing to file accounts.

Lycamobile, an international firm that sells foreign mobile calls, gave the Tories £136,180 in the current quarter and £40,000 in the quarter before that, making the company the Tories’ third biggest donor over this period.

But the latest available figures show the company did not pay any tax between 2008 and 2010 despite generating a turnover of between £47m and £88m.

This year’s accounts are so late that last month Companies House announced they might “dissolve” the company, striking them off their register and forcing them to cease trading. At the end of March Lycamobile persuaded the regulator to suspend the moves.

The company has insisted it has not paid taxes because it was “growing the business” and therefore had not generated taxable income.

But John Mann, the Labour MP who has campaigned for greater scrutiny of party funding, said: “If the company can afford to give to the Tories, they can afford to pay British taxes. Maybe the Tories should consider giving money to the Inland Revenue.”

The Docklands-based company was founded by Subaskaran Allirajah, an entrepreneur who is pictured on his website with prominent politicians including the development secretary, Andrew Mitchell, and the business secretary, Vince Cable.

Last month, executives from the company attended a fundraising benefit for Labour’s London mayoral candidate, Ken Livingstone, in a Mayfair restaurant where they discussed the possibility of giving £100,000 – but no money has been handed over.

The company had an £88m turnover in 2010 – the latest year for which accounts are available. In 2009 the firm took in £47m and in 2008 it received £2.7m. However, because Lycamobile claimed losses, the firm has been tax free: it did pay £8,000 in 2008, but this was refunded in 2009.

Allirajah controls another company, Lycatel, that sells cheap international calling cards. Between 2008 and 2010 Lycatel had a turnover of £260m, but again paid no tax.

Cheap international calls are big business, as low-paid migrant workers look for the best rates to phone home.

In July, Lycamobile issued an advertisement claiming: “Call India, Pakistan and Bangladesh landlines for only 1p a minute”. The Advertising Standards Authority (ASA) banned this misleading ad for playing down the way Lycamobile rates increase after 15 minutes. In February, Lycamobile faced censure for issuing leaflets offering “1/2p a minute” international calls.

A Lycamobile spokesman said the company paid all taxes due. “Lycamobile UK Ltd has made trading losses in the normal course of growing its business in 2009-2010 and as a result has not been required to pay tax,” he said.

The delay in publishing this year’s accounts is, he said, a result of a “very thorough” audit by Ernst & Young. “This has caused a delay in finalising the 2011 annual statements. These statements have now been completed and are awaiting final audit sign-off,” he said.

Regarding the discussion of a donation to Livingstone’s campaign, he added: “It is only natural that a company staffed by thousands of individuals of varying political backgrounds and conscious of representing those differing views is then free to attend events organised by any political party or none.”

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Comments
  • DAVID A SHAW June 5, 2012 at 2:44 pm

    One more criminal act to add to the many that are ignored and even profited from by this current bunch of fascists in government.

  • jeffrey davies June 5, 2012 at 6:26 pm

    and thats why the big companies get away without paying tax they give some back to the torys is this right when the working man pays his but people above pay nowt if there is is it not a crimal act where they get away with it but if you pay 10pound less they chassing you for it bloody mockery of our laws untill they change wel get no justice jeff3

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