Auditors refuse to approve Lycamobile UK's accounts.

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Auditors were unable to approve the accounts of telecoms company Lycamobile UK, putting additional pressure on the former Conservative donor who was also involved in a dispute with HM Revenue & Customs.

PKF Littlejohn failed to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion on the company's financial statements for the year ended December 31, 2022, according to a filing at Companies House. Almost $150 million.

The revelations come after the French unit of Lycamobiles, which had urged Chancellor Rishi Sunak to return donations, was found guilty of money laundering and VAT fraud last year.

The international mobile virtual network operator donated $2.15 million to the Conservative Party between 2011 and 2016, according to an Electoral Commission database.

PFK Littlejohn said it was unable to obtain sufficient and appropriate audit evidence regarding the recoverability of $105,979,000 of outstanding balances from related parties and $41,704,000 of outstanding balances from directors and related parties. He also said there was a lack of evidence about the company's ability to rely on the group's liquidity to provide financial support when needed and the completeness and accuracy of its deferred income balance of 10,870,000 in relation to creditors.

The auditor added that management anticipated that to remain a going concern, the company would need to be able to recover relevant equity/party debtors or rely on financial support from the group where necessary.

The report added that it was also unable to determine whether there were significant distortions in other information.

The directors' report in the filing said they believe the company will be able to continue to operate and meet its obligations as they fall due in the near future. He added that financial risks were mitigated by the availability of financial support from relevant parties when required.

Lycamobile did not immediately respond to a request for comment.

Lycamobile UK swung to a pre-tax loss of $24.3 million in 2022 from a pre-tax profit of $8.4 million the previous year. This is despite the mobile virtual network operator reporting a 5% increase in revenue in 2022 compared to 2021, to $145.4 million.

The company also recorded a provision of $99 million in relation to a VAT dispute with HMRC, after which it said the number of directors had increased.

The dispute was heard in court last May. Lycamobile UK said it expected a decision as early as September, according to a Companies House filing. Once a decision is made, either party can appeal it, he added.

Last October, the Paris Criminal Court found Lycamobiles French corporation guilty of fraud in relation to value-added tax and money laundering and fined it $10 million. Lyca Mobile France appealed the conviction and continues to maintain its complete innocence, Lycamobile said.

Last year, a Tory official said: All donations to the Conservative Party are properly and transparently declared and posted to the Electoral Commission and are fully compliant with Electoral Commission rules.

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