Freeserve hits out over rival's tax breaks

NEWS Freeserve is pushing the European Union to take legal action against the UK government over a loophole that allows ISPs based outside the UK to avoid VAT. The Wanadoo-owned ISP has taken its complaint to Brussels in an attempt to change the gaping hole in EU law which rival ISP AOL has been able to exploit. AOL is based in the US and Freeserve estimates the company saves around £30m in tax each year. In a letter to Labour MP Paul Boateng dated 12 November, Freeserve company secretary David Melville threatened the government with the legal action it has now resorted to. He said: "We will have no option but to pursue a remedy against the UK government before the European Commission, arguing that the government's failure to act puts it outside the scope of current community law."