US-based AOL has so far been exempt from charging its customers value added tax because it is registered for tax purposes in the US. This loophole in the tax system has been saving the AOL Time Warner-owned ISP £30m a year.
Freeserve, which has been lobbying the UK government for months, is said to be preparing a case for judicial review in an attempt to have the loophole closed.
The ISP's renewed effort follows last week's decision by the European Commission to pass a directive requiring all non-EU companies to charge VAT for sales of digital products and services.
The new directive could add a 15-25% tax on a variety of online transactions with non-EU companies, including on ISP subscriptions.
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