Which methodology?

Application for judicial review of decision to change VAT calculation method

Telefonica Europe plc and Telefonica UK Ltd provided mobile telecommunications services to business and private customers in the UK. Supplies to private consumers were made on a ‘pay as you go’ basis for which customers paid in advance for the services used or under a contract for monthly payments in arrears.

Between 2008 and 2014 Telefonica in agreement with HMRC used a Revenue methodology. First it determined what proportion of the charges paid by the customer for additional services in a month related to those used in non-EU countries compared with total charges paid by the customer in that month for the time spent and number of texts sent. Telefonica then applied that proportion to the network access charge and treated the amount not subject to VAT.

In November 2014 HMRC decided the revenue methodology...