The company (LMUK) managed a loyalty scheme for retailers. Their customers were awarded point sunder the schem on purchasing items, and then redeeemed those points against other purchases. LMUK sought to recover input tax on the invoices it paid to the companies accepting the loyalty cards against its sales. LMUK now appealed against refusal of credit for VAT on items supplied by it, saying that that the judge should have held that the payments which it made to Redeemers in pursuance of the Scheme were payments by way of consideration for the supply of services: that is to say, for the supply of the redemption services to LMUK. It is said that the judge should have recognised that the decisions of the House of Lords in Redrow and in Plantiflor required him to reach that conclusion; and that he was wrong to hold that those decisions had no application in the present case. It operated a customer loyalty scheme for other companies, supplying goods as points were collected and claimed.
Held: The supply of goods in such circumstances was a supply to the operator of the scheme, and the taxpayer was entitled to the appropriate tax credits.
This was not a case appropriate for a reference to the ECJ. The issue was not as to the interpretation of Community legislation, or as to the effect to be given to judgments of the Court of Justice, but as to how principles which were not in doubt should be applied to the particular facts. That was an issue which the Court of Justice would expect the national court to resolve.
Judges:
Chadwick LJ, Laws LJ, Evans-Lombe J
Citations:
[2007] EWCA Civ 965, Times 10-Oct-2007, [2008] STC 59
Links:
Statutes:
Council Directive 77/388/EEC 17
Jurisdiction:
England and Wales
Citing:
At VDT – Loyalty Management UK Ltd v Customs and Excise VDT 6-Apr-2005
VDT VALUE ADDED TAX – input tax – the Appellant operates the Nectar programme under which customers who purchase goods (called primary goods) from certain retailers receive points which they may use to acquire . .
At ChD – Revenue and Customs v Loyalty Management UK Ltd ChD 22-Jun-2006
The taxpayer operated a substantial loyalty reward scheme (Nectar) for assorted companies. The Revenue appealed against an order allowing the company to reclaim input VAT. The court was asked now: ‘what is the proper characteristic, for VAT . .
Cited – Auto Lease Holland BV v Bundesamt fur Finanzen ECJ 6-Feb-2003
The court identified the need to give an autonomous meaning to the phrase ‘supply of goods’ in article 5(1) of the Sixth Directive as follows: ‘ . . .. it is clear from the wording of that provision that ‘supply of goods’ does not refer to the . .
Cited – Commissioners of Customs and Excise v Redrow Group Plc HL 11-Feb-1999
Where house builders had paid the estate agents’ fees for exchanged property on sales, the supply had been, at least in part, to the builder, and the builder could accordingly recover the agents’ VAT as input tax. A supplier could be treated as . .
Cited – Commissioners of Customs and Excise v Plantiflor Limited HL 25-Jul-2002
The company charged no VAT on its postage and packaging charged to mail order customers. The company had described it as an advance of the sums to be charged by Parcelforce.
Held: There was no separate contract between the end customer and . .
Cited by:
At CA – Loyalty Management UK (Taxation) ECJ 7-Oct-2010
ECJ (prelimiary ruling) Sixth VAT Directive – Taxable amount – Sales promotion scheme – Loyalty rewards scheme allowing customers to earn points from traders and to redeem them for loyalty rewards – Payments made . .
Cited – Revenue and Customs v Aimia Coalition Loyalty UK Ltd SC 20-Jun-2013
Decisions about the application of the VAT system are highly dependent upon the factual situations involved. The case-law of the Court of Justice indicates that, when determining the relevant supply in which a taxable person engages, regard must be . .
Lists of cited by and citing cases may be incomplete.
VAT
Updated: 12 July 2022; Ref: scu.259876
