Feeds

Freeserve gets nod for AOL legal action

Taxing times

  • alert
  • submit to reddit

Security for virtualized datacentres

Freeserve has been given the green light to challenge HM Customs and Excise's decision not to charge VAT on AOL's Internet service in the UK.

In London's High Court yesterday Mr Justice Moses cleared the way for Freeserve to continue its long running battle to achieve what it regards as a "level playing field" regarding the taxation of ISPs.

No date has been set for the full judicial review.

Freeserve has argued throughout that AOL benefits to the tune of around £40m a year thanks to a tax loophole that excludes it from paying Value Added Tax (VAT).

In a statement Freeserve said: "Freeserve is pleased to have won the opportunity to proceed with its challenge to what we believe to be the unlawful VAT treatment of AOL in the UK.

"We estimate that £100m of tax has been lost to the Treasury through Customs' failure to apply existing law, and find it extraordinary that we should even need to undertake this action for the UK Treasury when this is money to which the UK government is already entitled.

"Naturally, we intend to continue our campaign for a level playing field between ourselves and AOL," it said.

AOL levies no VAT on its services in the UK thanks to a 1997 ruling that maintains that the company is a content provider operating outside the European Union, and therefore not liable for VAT.

If AOL UK had, like Freeserve, been a classified as a telecoms provider within the EU, then it would have had to charge VAT.

AOL UK appears to have avoided this classification because its servers live in Virginia.

In March it was confirmed that AOL would have to start charging UK customers VAT from July 1, 2003, bringing it into line with other British ISPs.

However, Freeserve was not happy with this and argued that AOL should still be forced to pay the tax now and not wait until next year.

Announcing in March the ISP's intention to press ahead with legal action Freeserve's former CEO, John Pluthero, said: "The UK government has been fobbing off Freeserve and BT for over a year on this issue. It's time for the evasion to stop and the litigation to begin."

In July Freeserve said it was moving its unmetered ISP business Madeira to take advantage of the island's cheapo VAT regime. ®

Related Story

Freeserve Anytime moves to Madeira
EU closes AOL UK VAT loophole (but not yet)
Freeserve goes legal in AOL VAT spat
Tax AOL now, says Freeserve

Beginner's guide to SSL certificates

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
HBO shocks US pay TV world: We're down with OTT. Netflix says, 'Gee'
This affects every broadcaster, every cable guy
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
SCREW YOU, EU: BBC rolls out Right To Remember as Google deletes links
Not even Google can withstand the power of Auntie
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Apple SILENCES Bose, YANKS headphones from stores
The, er, Beats go on after noise-cancelling spat
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
America's super-secret X-37B plane returns to Earth after nearly TWO YEARS aloft
674 days in space for US Air Force's mystery orbital vehicle
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.