Allirajah Subaskaran, one of the Conservative Party’s prominent donors, has found himself at odds with accountants as his mobile phone firm has faced a £100 million demand from the tax authorities over alleged VAT irregularities.
The 50-year-old British-Sri Lankan businessman behind Lycamobile has seen his company getting an unusual “disclaimer of opinion” verdict by auditors of his venture’s UK arm, The Telegraph reported.
According to the report, auditors to Lycamobile UK Limited said they were “unable to obtain sufficient appropriate audit evidence” in connection to loans worth £18 million made by the company to Mr Subaskaran and Mrs P Subaskaran – believed to be his spouse, Premantharshini Subaskaran.
Besides, a further debt of £169 million owed by a complex web of related party companies could not be verified either, auditors from PKF Littlejohn discovered, recent corporate filings said.
“These matters individually and together represent a material and pervasive issue,” senior statutory auditor at PKF Littlejohn, Mark Ling, was quoted as saying by The Telegraph.
Gavin Pearson, managing director and head of forensic accounting and investigations at Quantuma, a leading business advisory firm, said, “It is extremely rare for an audit report to include a disclaimer opinion, given this means that the auditors are saying that they can’t form an opinion on the accuracy of the financial statements.
“The issue leading to the disclaimer was that the auditors had been unable to satisfy themselves that the company would, in some scenarios, be able to collect sufficient liquidity from related party companies and directors in order to remain a going concern [to continue trading solvently].”
Subaskaran founded Lycamobile, which specialises in affordable pay-as-you-go sim cards for people seeking to make calls in the UK and abroad, in 2006.
The company claims to be the “world’s largest international mobile virtual network operator with over 16 million customers and a new customer joining every two seconds”.
The Sri Lankan-born Subaskaran, whose net worth was estimated at £170 million five years ago, donated more than £2 million to the Conservative party between 2011 and 2016.
He also supported former British prime minister Boris Johnson during the latter’s re-election campaign for London mayor by providing him the use of Lycamobile’s Canary Wharf offices to facilitate telephone canvassing sessions.
In recent years, however, it has been embroiled with a dispute with HM Revenue & Customs (HMRC), the report added.
HMRC came up with demands against Lycamobile UK Limited over corporation tax returns between February 2013 and December 2018. It later dropped the determinations after the company made an appeal.
HMRC continues to dispute Lycamobile UK Limited’s treatment of VAT.
According to the firm’s estimate, it could owe the taxman £105.5million, including penalties and interest. The business’s accounts for 2021, published by Companies House in the middle of last month, showed.
Lycamobile officials said in the accounts that they do not expect the VAT dispute to be resolved in the next one year.
