The European Court of Justice has told Everything Everywhere, the merged operations of T-Mobile UK and Orange UK, that it is liable for £4m in tax it had claimed it did not owe.
The case dated back to 2005, when T-Mobile UK claimed it had overpaid £4,063,228.08 in tax. The operator charges contract customers who do not pay by Direct Debit or BACS £3 per month for not using those services. It had tried to claim that these charges were not liable for sales tax.
In a judgement delivered on Thursday, Europe's top court disagreed, saying the extra charges were not separate from the main bill, and were therefore indeed subject to sales tax.
"Everything Everywhere's customers who pay their mobile telephone bills using one of the payment methods which incur the [charge] do not intend to purchase two distinct supplies," the court noted.