"A transaction fee is a one-off charge per order. It covers the administration costs and overheads associated with each ticket sale."
“Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse; … ( d ) the following transactions: … 3 transaction, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring;”
“The Cost of Booking Ticket Prices Ticket prices are set by the (independent) Promoters and Organisers of the concerts and events which are staged at the venues of The NEC Group. The Promoters and Organisers distribute tickets for sale through various Ticket Agents and in effect The NEC Group Box Office simply acts as another one of these Agents. Booking Fees Booking fees are charged by The NEC Group Box Office to help offset operational costs such as postage, credit card commission, labour, telephony and IT maintenance charges. The NEC Group regularly reviews the level of booking fees in order to remain as competitive as possible with other comparable venues across the UK. PLEASE NOTE: For concerts and events staged at the venues of The NEC Group, the Group chooses to waive the booking fee if tickets are purchased at a Group venue Box Office using cash, cheque or debit card (eg Switch or Visa Delta). Booking Online The NEC Group has invested significant resources in The Online Box Office and booking fees are charged to help offset the on-going maintenance and development costs of the Internet Booking facility, as well as the usual operational costs. The NEC Group regularly reviews the level of booking fees and is currently evaluating the case for charging lower booking fees to Customers booking via the internet.”
“Tickets may be subject to a booking fee and/or postage fee. BOOKING FEE CHARGES Ticket Price Telephone Booking Fee (per ticket) Credit Card Counter Sales (per ticket)£0 -£9.99 £1 £1 £10.00 -£19.99 £2 £2 £20.00 -£29.99 £3 £3 £30.00 plus 10% of ticket price or as advised 10% of ticket price or as advised Please check your tickets before leaving the counter as mistakes cannot always be rectified. Some concerts and events may be subject to a 'transaction fee' instead of a booking fee. This fee is charged per transaction, irrespective of the number of tickets bought per transaction. Postage fees will still apply. Coach companies and groups of 20 or more people usually pay 50% of the telephone booking fee whether by telephone or counter sales. Mixed payments ie credit cards/cheque and credit card/cash will be subject to booking fee for credit card counter sales. Cheques can only be accepted up to the value of the accompanying cheque card. ATTENTION IS DRAWN TO THE TERMS AND CONDITIONS PRINTED ON ALL TICKETS. A COPY OF THE TERMS AND CONDITIONS IS AVAILABLE ON REQUEST”
“ Booking Fee FAQ and Phone Script Customers can often find booking fees and transaction fees confusing when purchasing tickets. When breaking down the fees associated with a booking and you are asked by a customer to explain what these fees are for, please use the below explanations to assist with this. Please also reassure the customer that we regularly review our booking and transaction fees to ensure The Ticket Factory offers customers better value than other ticket agents and our policy is to always clearly identify any applicable fees. Information regarding our booking and transaction fees is also available for customers on The Ticket Factory website. Why do I pay a booking fee? In order to facilitate the processing of credit/debit card payments for bookings, ticket agents charge per ticket booking fees for the services they provide. It is also the ticket agent (not the Promoter) that accepts the risks associated with processing transactions by credit/debit card and, in cases of fraud for example, is required to refund the full ticket price as well as the booking fee to the Customer even when obliged to pay the Promoter as though the sale were genuine. Why is the booking fee separated? With regard to the prices and fees charged for tickets there is understandably a common misconception that events are promoted by the NEC Group venues they are staged at. Events are in fact brought to venues by independent Promoters and Organisers who are responsible for all aspects of the production including setting ticket prices. The ticket income belongs to the Promoter and is calculated to take into consideration the costs of staging the event and payments to the participants/artists etc. The Promoter distributes tickets for sale through ticket agents and The Ticket Factory, as the official box office for the venues of The NEC Group, simply acts as one of these ticket agents. Why do I pay a transaction charge? Other additional transaction fees, performance fees or delivery fees including special delivery, are charged per order to help offset other operational costs and overheads associated with ticket sales e.g. event administration including inventory control, ticket stock/stationery, access control systems, collection facilities and postage and/or packaging costs as applicable.”
“The above [concert] is being promoted at the National Exhibition Centre. The purpose of this Agreement is to appoint NEC as an agent for the sale of all tickets for the event, The appointment is made and accepted subject to the following terms and conditions:- 1 NEC will arrange for the production of the tickets to the standard specification decided by NEC as detailed in the Licence Agreement and including NEC's terms and conditions of sale as from time to time in force. The ticket prices will be inclusive of VAT and any booking fee the promoter may wish to make (as made known in writing) 2 NEC does not have any liability to account for VAT on gross tickets sold through NEC Limited. The Promoter is responsible for the accounting of VAT to HM Customs & Excise on the value of gross tickets (excluding booking fee charges that NEC levy's under clause 3 of the agreement) 3 NEC reserves the right to charge a booking fee on all tickets sold and to appoint subagents. The number of tickets sold will be limited to six per person. The booking fee will be as follows:- Ticket Prices Phone Booking Fee (Per ticket)£9.99 & under£1.00 £10.00 -£19.99 £2.00 £20.00 -£29.99 £3.00 £30.00 and over 10% of ticket price or as advised The Booking Fee will only apply to telephone, credit card and postal bookings and tickets purchased through sub-agents. … 10 The Promoter agrees to keep NEC fully indemnified in respect of all claims, proceedings, demands, costs and expenses brought or made against NEC or born or incurred by NEC and which in any way arise out of the printing and sale of tickets by NEC in accordance with this Agreement including, but not limited to, any postponement or cancellation of the event and dishonouring of cheques, postal orders and other methods of payment, provided that this indemnity shall not apply to matters which are caused by negligence on the part of NEC or by a failure by NEC to observe its obligations under this Agreement.”
“2.1 The Ticket Factory [ie NEC] is appointed by the Organiser [ie the promoter] irrevocably to act as agent for the Organiser to offer for sale and sell tickets for the Event in accordance with the terms of this Agreement and on the basis that all such tickets sold evidence a contract as between the purchaser of the Ticket ('Customer") and the Organiser ("Customer Contract”), and not as between the Customer and the Ticket Factory. The Ticket Factory shall collect the proceeds of sale of all such Tickets on behalf of the Organiser and account to the Organiser therefor in accordance with Clause 8. … 4.2 The Organiser hereby authorises The Ticket Factory to collect the Booking Fee and the Transaction Fee for The Ticket Factory's own account in addition to any funds collected by The Ticket Factory on behalf of the Organiser in relation to Ticket Sales.”
“ Why does a chargeback occur? Chargebacks can arise for many reasons some of which are detailed below: - · errors in processing or procedure e.g. an invalid account number was quoted on the transaction receipt · fraud-related e.g. the genuine cardholder did not participate in the sale · cardholder disputes e.g. the goods delivered differed from the goods ordered · documentation-related e.g. failed to respond to a Request for Information letter within the stated timescales · authorisation-related e.g. a valid authorisation code was not obtained and the transaction is over the floor limit of which you have been advised Credit card and debit cards do not offer a guaranteed form of payment for goods or services. Every transaction undertaken can be subject to return by the card issuer even where authorisation had been obtained and all standard sales procedures, outlined in your Streamline contract, have been followed. The chargeback process is regulated by the Card Schemes; Visa International and MasterCard International. Liability for the chargeback must be accepted unless it can be proven that the chargeback is invalid in accordance with the Card Scheme rules. Where a chargeback has occurred due to a dispute between you and your customer (the cardholder) and no resolution between the two parties can be reached via the Member Banks, the Card Scheme has overall authority to decide with whom the liability for the transaction will lie. At this point we would have no further recourse to the Card Issuer via the Card Scheme rules.”
“ Ticket service charges Official ticket sellers generally act on behalf of event promoters, venues or performers. The typical way that most ticket sellers and secondary websites earn money is through the additional service fees they charge customers. These extra service charges create a contract between you and the ticket seller, so they're obliged to get you your tickets in time. It’s not only ticket agents that charge service fees. Theatres can also add a service charge if you use their online or phone services to book tickets. The same applies for many major event venues. Ticket seller charges There are typically two types of extra fees charged by ticket sellers on top of a ticket’s face value: · A booking fee or service charge for every ticket in your order. · A postage charge for each complete order. There is no standard way to calculate a service charge for particular tickets. Promoters and agents agree on the fees for each individual event. Even opting to collect your tickets at a venue's box office rather than having them delivered to your door often attracts a charge from official ticket sellers, as does email delivery of tickets where you print them out yourself, such as Ticketmaster’s Ticketfast service. Avoid ticket service charges Often, the first a consumer hears about a ticket seller's service charges is when they go through to a sales site or phone line to book the tickets, so don't rely on promotional advertising to give you the full price you’ll pay when you buy tickets. There should always be an option to buy tickets at face value without paying extra service charges. For many events the only way to avoid paying any extra charges is to turn up at the venue's box office. Even then, pay cash to avoid a service charge, as some venues will charge you a fee for paying by credit card. The term used to describe extra charges caries among different ticket sellers. For example, a booking fee or service charge can also be a ‘processing fee' or 'commission'. The delivery fee can also be known as a “transaction fee' or 'order processing fee'.”
“Summary The House of Lords has refused HMRC's petition to appeal the Court of Appeal judgment in Bookit … and HMRC will not be seeking leave to appeal the judgment of the Court of Session in the case of SEC … The effect of the end of litigation in these two cases is that debit and credit card handling services provided by agents are VAT exempt where a key identified component is present in the service. Claims held pending the outcome of these cases will now be reviewed for payment and any assessments raised by HMRC for under-declared tax will be withdrawn where appropriate. Background The Bookit case concerned the supply of Odeon cinema tickets. Customers wishing to purchase cinema tickets remotely, eg by phone or Internet, were redirected to Odeon's agent, Bookit, who charged the customer an additional fee over and above the price of the ticket for their service. Bookit contended this fee was for credit or debit card handling services and was VAT-exempt as a transaction concerning payments or transfers. The tribunal found that Bookit was providing a taxable card handling service to the customer in return for the additional fee. The High Court, in overturning the tribunal's decision, found that Bookit was carrying out an exempt card handling service. The Court of Appeal, in upholding the High Court judgment, found that the supply by Bookit to the customer included the following components— — obtaining the card information with the necessary security information from the customer; — transmitting that information to the card issuers; — receiving the authorisation codes from the card issuers; and — transmitting the card information with the necessary security information and the card issuers' authorisation codes to Girobank. The Court found that the tribunal had been correct in finding components (i) to (iii) to be taxable, but because the fourth component was part of Bookit's service to the customer, and had the effect that funds were transferred to its account with Girobank, exemption was available to Bookit. The SEC case concerned the supply of tickets to events held in the Scottish Exhibition and Conference Centre in Glasgow. SEC acted as agent of the promoter in the selling of tickets and charged an additional fee to customers on tickets that were paid for by credit and debit card. SEC contended this fee was for card handling services and was VAT exempt. The tribunal found in HMRC's favour, stating that SEC was providing a single taxable booking service, with the taxable card handling service representing an ancillary aspect enhancing the main service. The Court of Session overturned the tribunal decision, finding that SEC was carrying out an exempt card handling service. The Court based its judgment on the decision of the Court of Appeal in Bookit and on an assumption of similar facts. HMRC do not therefore draw a distinction between the two judgments. Implications of the judgments The judgments have provided further guidance on when a service of credit or debit card handling by an agent is VAT-exempt. If an agent, acting for the supplier of the goods or services, makes a charge to the customer over and above the price of the actual goods or services, for a separately identifiable service of handling payment by credit or debit card, and that service includes the fourth component listed above, then the additional charge will be exempt under VATA 1994 Sch 9, Group 5 , item 1. However, where an agent provides some or all of the first three components without providing the fourth, the charge is taxable at the standard rate of VAT. Charges levied on the cardholder for payment by credit and debit card in any other circumstances will not fall within the exemption for financial services and the normal VAT treatment will apply. The judgments do not alter the general principle that the taxable amount for a supply of goods or services includes all payments which the supplier requires the customer to make as a condition of receiving the supply. If, for example, a supplier of goods or services requires a customer to pay an additional charge, above that of the price of the actual goods or services, for payment by credit or debit card, that charge is further consideration for the purchase of those goods or services and VAT is payable on that amount in accordance with the VAT treatment of the goods or services. Information on making claims or adjustments Agents supplying card handling services that meet the criteria set out above, and who have been treating the charge as taxable at the standard rate, should exempt such services from the date of this Business Brief. … There is no requirement to make adjustments in respect of earlier supplies. However, where businesses wish to make a claim to HMRC for a repayment of output tax incorrectly paid, they may do so, subject to the conditions set out below, … HMRC will review claims by businesses for exemption of supplies of debit and credit card handling services, and businesses can expect requests to be challenged vigorously where there is evidence of underlying artificiality or abuse.”
“Both in fact and in law the appellant provides two separate services to customers who pay for tickets by credit card or debit card. The appellant acts as agent for the promoter in selling the ticket, and as principal in charging the booking fee for taking the steps necessary to effect payment by credit card or debit card. While the customer might not be aware of the detail by which this might be effected, he or she is aware that there are two charges, one for the price of the ticket and the other for the facility of payment by credit card or debit card.”
“The question is whether, for tax purposes, these are to be treated as separate supplies or merely as elements in some over-arching single supply. According to the Court of Justice in Card Protection (at para 29), for the purposes of the directive the criterion to be applied is whether there is a single supply 'from an economic point of view'. If so, that supply should not be artificially split, so as not to distort (altérer) the functioning of the VAT system. The answer will accordingly be found by ascertaining the essential features of the transaction under which the taxable person is operating when supplying the consumer, regarded as a typical consumer. Since the 1994 Act has not adopted any different mechanism to give effect to this aspect of the directive, the same approach must be applied in interpreting the provisions of the Act. The key lies in analysing the transaction.”
“The primary issue for determination is the extent of the agency in terms of which the appellant acted for its promoter customers … The “box office” and telephone booking service maintained by the appellant is extensive. The contractual relationship with the promoter does not require this … The reason for this service in our view is the appellant's eagerness to promote itself as a popular venue and anxiety to develop a “customer loyalty” and “customer base” to better enable it to sell to promoters space for concerts and other entertainment … We note that the cost of this service as represented by the fee exceeds substantially the credit card charge on the transaction … It follows in our view that the range of services provided by the appellant at the box office and by telephone extends well beyond its role as agent of the promoter which is (simply) for the sale of tickets. These services are undertaken by the appellant as a principal and in its own interests … In the present case there is a booking service offering extensive customer support with a view to promoting the appellant's business and with the credit card facility representing an ancillary aspect enhancing the main service.”
“In our opinion the tribunal erred in reaching this conclusion. … The tribunal gave no reason why it apparently rejected Mr Sharkey's evidence, that the booking fee was paid for the facility of booking by credit card or debit card. There is some indication that the tribunal confused the booking fee charged by the appellant to a customer with the booking fee the appellant was entitled to charge, but did not in practice charge, to the promoter in terms of para 4(b) of the ticket sale agreement. The tribunal took into account the evidence about the giving of certain information by telephone operators, without recognising that there was no evidence that the giving of any such information constituted any part of any supply made for a consideration by the appellant. It was held in Staatssecretaris van Financiën v Coöperatieve Aardappelenbewaarplaats GA (Case C-154/80 ) [1981] ECR 445 , para 12 of the judgment, that there must be a direct link between the consideration and the supply; see also ss 4(1) and 5(2)(a) of the 1994 Act. The tribunal erroneously took into account the fact that the cost of the service exceeded the booking charge on the transaction. The use made by the appellant of the proceeds of the fee charged was irrelevant to its proper characterisation. The tribunal also erred by taking into account the role of the appellant as agent of the promoter. Supplies consisting of sales of tickets were made not by the appellant, but by the promoter through the appellant as agent. These supplies were therefore irrelevant in the characterisation of the nature of the supply made by the appellant in its own right. Most importantly, the tribunal erred by failing to take into account the undisputed evidence that a fee was charged whenever, and only whenever, a booking was made by credit card or debit card. The tribunal failed to take into account the fact that a booking fee would be incurred by a customer paying by credit card in person at the box office, and the fact that no fee would be incurred by a telephone booking in which the customer paid by cheque rather than by credit card. In these circumstances, in our opinion the tribunal based their decision upon matters which they ought not to have taken into account and disregarded matters which they ought to have taken into account. Having regard to the tribunal's findings in fact and to Mr Sharkey's uncontroversial evidence, the only conclusion reasonably open to the tribunal was that the booking fee charged by the appellant was charged in consideration of the facility of booking by credit card or debit card. In our opinion, no reasonable tribunal could have reached the conclusion which the tribunal reached. ...”
“[16] By its questions the national court is asking in effect whether points (3), (4) and (5) of art 13B(d) of the Sixth Directive are to be interpreted as exempting from VAT supplies of services made to banks and their customers by a data-handling centre set up to serve the common interests of banks where those services contribute to the execution of transfers, to the provision of advice on, and trade in, securities, and to management of deposits, purchase contracts and loans and in the main are performed wholly or partly by electronic means. … [19] Amongst those aspects it is important to distinguish (i) the persons effecting the transactions, (ii) the way in which they are effected, (iii) the contractual links between the provider of the services and the person to whom they are provided, and (iv) the nature of the service provided by the data-handling centre. … [38] … points (3) and (5) of art 13B(d) of the Sixth Directive are to be interpreted as meaning that the exemption is not subject to the condition that the transactions be effected by a certain type of institution, by a certain type of legal person or wholly or partly by certain electronic means or manually. … [59] … the exemption provided for by points (3) and (5) of art 13B(d) is not subject to the condition that the service be provided by an institution which has a legal relationship with the end customer. The fact that a transaction covered by those provisions is effected by a third party but appears to the end customer to be a service provided by the bank does not preclude exemption for the transaction. … [66] In order to be characterised as exempt transactions for the purposes of points (3) and (5) of art 13B, the services provided by a data-handling centre must, viewed broadly, form a distinct whole, fulfilling in effect the specific, essential functions of a service described in those two points. For 'a transaction concerning transfers', the services provided must therefore have the effect of transferring funds and entail changes in the legal and financial situation. A service exempt under the directive must be distinguished from a mere physical or technical supply, such as making a data-handling system available to a bank. In this regard, the national court must examine in particular the extent of the data-handling centre's responsibility vis-à-vis the banks, in particular the question whether its responsibility is restricted to technical aspects or whether it extends to the specific, essential aspects of the transactions. [67] It is for the national court, which is acquainted with all the facts of the case, to determine whether the operations carried out by SDC have such a distinct character and whether they are specific and essential. [68] … point (3) of art 13B(d) of the Sixth Directive … is to be interpreted as meaning that transactions concerning transfers and payments include operations carried out by a data-handling centre if those operations are distinct in character and are specific to, and essential for, the exempt transactions.”
“67. It is to be noted that although Bookit was not paid by Odeon for its services as agent, the agency gave Bookit the opportunity to charge customers for card handling and to benefit from telephone revenue sharing arrangements. 68. The customer who rings the call centre will normally be unaware of the fact that he is telephoning Bookit rather than Odeon until after he has pressed the advanced bookings button. Even then there is nothing to tell the customer that the involvement of Bookit as principal extends beyond card handling. 69. When Bookit is finding out the customer's requirements and checking the availability of seats in accordance with those requirements, it is not in our judgment performing any service for a consideration for the customer. The recording by Mr Barnett included the employee as referring to “taking bookings”, see paragraph 24. This was a preliminary to a sale on behalf of Odeon. Odeon received nothing unless the ticket was sold. Bookit received nothing unless the card transaction followed. If matters had stopped at that point there would have been no question of any consideration being paid by the customer any more than if a retailer shows goods to a customer who after asking questions does not make a purchase. 70. The next step in Mr Barnett's transaction was that Bookit obtained the customer's card details together with his telephone number and postcode. At that point Bookit was expressly involved and Mr Barnett, the customer, by proceeding agreed to a charge by Bookit in addition to the ticket price. By providing his card details Mr Barnett agreed to his account with the issuer of the card being debited and to the payment being credited to Odeon and Bookit in satisfaction of the price of the ticket and Bookit's fee. 71. It is most unlikely that a customer would be aware of the settlement mechanism under which Girobank received payment from the card issuer and paid Bookit which in turn paid the ticket element to Odeon. The customer would however know that the transaction involved the provision of credit by the card issuer, unless the card was a debit card, and involved the transfer of money from his account with the card issuer to discharge his liability for the ticket and Bookit's fee. 72. It was not suggested by Mr McKay for Customs that when Bookit takes the customer's card details and transmits them to Girobank it is not performing a service for the customer, see paragraph 9 of the amended Statement of Case. The dispute was rather as to whether those services form part of a package described as “cinema seat booking services.” 73. We have already concluded that in providing information prior to the customer's decision to book tickets for a specific performance Bookit is acting as agent for Odeon on whose behalf it is selling the tickets. We have also concluded that when accepting payment by means of the customer's card for the tickets Bookit is also acting as agent for Odeon. As a matter of contract, Bookit is accepting the payment offered by the customer, it being a term of the contract that payment would be by card. 74. The final component of the booking services on which Mr McKay relied is sending notification to Odeon's computer system that the seats have been taken and informing the customer that the booking has been confirmed. 75. In our judgment both of those functions are performed by Bookit as agent for Odeon and neither constitutes a service supplied by Bookit to the customer. Odeon cannot properly sell a seat for a cinema performance without taking steps to ensure that the seat is kept available. If Odeon is not informed by Bookit that the seat has been sold and that payment has been made by card, Odeon's automatic machine at the cinema will not issue the ticket. Similarly Odeon cannot charge a customer for an advanced booking without informing the customer that the booking has been accepted. 76. The result is that the only supply by Bookit to the customer is of card handling services and the submissions as to application of Card Protection Plan do not fall to be considered. The fact that the card handling services would if made by Odeon be ancillary to the sale of the tickets is not relevant since the card handling services were supplied by Bookit as principal.”
“80. It is necessary to focus upon the specific services provided by Bookit to customers for the 50 pence fee. These services start with obtaining the customer's card number and details including postcode. This information is transmitted to Girobank which gives authorisation where this is required as exceeding a specified limit. The processing by Girobank of the transaction is not part of any supply by Bookit to the customer. Nor in our judgment is either the confirmation by Bookit that the card payment is accepted, this being on behalf of Odeon, or the notification to Odeon of the purchase, this again being part of the agency service to Odeon. Again we do not consider that the act of informing the customer that he should collect the ticket from an automatic machine using the card is part of the supply by Bookit to the customer, this again being a service performed as agent for Odeon, the vendor of the ticket. 81. The actual components of the supply by Bookit to the customer are therefore limited to obtaining the card information with the necessary security information and transmitting this to Girobank. It does not even include any decision by Bookit whether to transmit that information, since in deciding whether to accept a payment by card not requiring authorisation from Girobank Bookit is not performing a service for the customer but is acting as agent for Odeon. … 86. The mere transmission of details to Girobank is essential to the completion of the transfer or payment by Girobank or the issuer, but that does not bring Bookit within item 1. The Appellant company has not satisfied us on the evidence that Bookit in transmitting on behalf of customers the required card information is itself transferring funds or bringing about changes of a legal and financial character. The transfers and financial changes are effected by Girobank and the payments are effected by the bank issuing the card.”
“There are four parties to the relevant series of events, namely (1) the Customer, (2) Girobank plc, (3) Bookit and (4) Odeon. In a typical transaction there are the following steps: 1. The Customer contacts Bookit by, say, telephone to ask if there are any seats available for a particular film in a particular cinema at a particular time on a particular day. 2. Bookit checks such availability with Odeon. 3. Odeon confirms to Bookit the availability of the required seats. 4. Bookit informs the Customer of such availability, the cost of the tickets and that it will make an additional charge for handling payment by debit or credit card. 5. Bookit takes the Customer's card details ('payment information') and verifies its right to use the card ('security information'). 6. Bookit transmits the payment information and security information to Girobank. 7. Girobank processes the payment for the seats by means of the Customer's debit or credit card and credits Bookit with the aggregate of the price for the seats and the card handling charge. 8. Bookit confirms the purchase of the tickets to Odeon. 9. Bookit confirms the booking and payment to the Customer and informs him that the tickets may be collected from the relevant cinema. 10. The Customer collects the tickets. 11. Odeon admits the Customer to the relevant showing. 12. Bookit accounts to Odeon for the sums received for the tickets but retains the card handling charge. 13. Bookit pays Girobank for the services it provides out of the card handling charges it has retained.”
“In my judgment the Tribunal arrived at the wrong conclusion. They did so because, having admitted further evidence, they did not sufficiently revisit their earlier conclusion. In particular whilst they recognised that their conclusions in paras 80 to 81 of the First Decision required some modification they did not spell it out. Similarly the conclusion set out in para 12 of the Second Decision assumes that the question is whether Bookit effected the payments. I do not think it is so limited. The service Bookit provided to the Customer constituted a transaction concerning such a payment, it was separately remunerated and it was not performed as agent or subcontractor of the Customer, Odeon or Girobank. As such, in my judgment, it came within art 13B(d)(3).”
“[35] It is clear, reading the first and second decisions together, that the tribunal found that the supply by Bookit to the customer included the following components: (i) obtaining the card information with the necessary security information from the customer, (ii) transmitting that information to the card issuers, (iii) receiving the authorisation codes from the card issuers and (iv) transmitting the card information with the necessary security information and the card issuers' authorisation codes to Girobank. But the tribunal did not make a positive finding that the supply was limited to those components. [36] The Vice-Chancellor pointed out that the effect of the supply by Bookit to the customer of services having the fourth of the components identified by the tribunal—the transmission of the card information, the security information and the card issuers' authorisation codes to Girobank—was that the price of the ticket and the card handling fee was transferred from the customer (in the case of a debit card transaction), or from the card issuer (in the case of a credit card transaction), to Bookit's account with Girobank. That is what cl 3.1.1 of the MSA required Girobank to do on receipt of the card transaction data. It was, I think, the tribunal's failure to appreciate that that was a necessary incident of the supply of services having the components which the tribunal had identified which led the Vice-Chancellor to observe ([1995] STC 1481 at [53]), that 'having admitted further evidence, [the tribunal] did not sufficiently revisit their earlier conclusion'. In making that observation the Vice-Chancellor clearly had in mind the reason which the tribunal had given at para 12 of their second decision, for holding that the conclusion which they had reached in para 85 of the first decision—'that Bookit in transmitting on behalf of customers the required card information is [not] itself transferring funds or bringing about changes of a legal or financial character'—remained unaltered. The reason given was that: '85 … while the transmission of the authorisation is an essential step, it does not itself bring about the payments or transfers. These are effected by Girobank.' [37] In addressing the first head of challenge—that the Vice-Chancellor was wrong to depart from the tribunal's finding that the actual components of the supply made by Bookit to the customer (or cinemagoer) were limited to the receipt and transmission of information—the short question, as it seems to me, is whether the Vice-Chancellor was entitled to have regard to the fact that it was a necessary incident of the supply of services having the fourth of the components which the tribunal had identified that the price of the ticket was transferred to Bookit's account with Girobank. In my view that was a fact properly to be taken into account. [38] … this is not a case in which the judge departed from the findings of fact which the tribunal had made, or made additional findings of fact which the tribunal had declined to make. The fact that it was a necessary incident of the supply of services having the fourth of the components which the tribunal had identified that the price of the ticket was transferred to Bookit's account with Girobank is inherent in the findings of fact which the tribunal did make in their first decision—that the mutual obligations of Girobank and Bookit were to be found in the MSA. In analysing the nature of the services supplied by Bookit to the customer—in the light of the further evidence available to them at the date of the second decision—the tribunal failed to take that fact into account. That, as it seems to me, was an error of law which the Vice-Chancellor was entitled to correct.”
“[46] It was submitted on behalf of the Commissioners that the transfer of funds to the credit of Bookit's account with Girobank was a matter of no importance to the customer; and, in particular, that the customer was unlikely to be aware of—and would probably be indifferent to—whatever arrangements or obligations might exist between Bookit and Girobank under the MSA. I accept that the machinery by which payment would be effected is unlikely to have been in the mind of the customer when he requested and accepted services from Bookit. But, as it seems to me, there can be no doubt that, in requesting and accepting Bookit's services, the customer contemplated and intended that some payment would be made which would enable him, on his attendance at the cinema of his choice, to collect the tickets which he needed; and intended that Bookit would arrange for that. The services which Bookit supplied—as identified by the tribunal—did have the effect which the customer contemplated and intended that they would have. The fact that the customer was indifferent to the machinery by which that effect was achieved seems to me irrelevant. The relevant questions are (i) what services were supplied by Bookit to the customer and (ii) did those services attract the exemption for which art 13B(d)(3) provides. As I have said, I am of the view that the answers which the Vice-Chancellor gave to those questions were correct.”
“[58] In my view, the substance of what the Court of Justice (see[2010] STC 2825 ) was saying in the last sentence of para 28 of its judgment was simply that, if the Denplan service was not debt collection or factoring, it would be within the art 13B(d)(3) exemptions. What the court then proceeded to do was to apply its case law to the facts relating to that service as found by the Value Added Tax and Duties Tribunal. The outcome was that it held that their correct characterisation was that of 'debt collection', a concept that, for the purposes of art 13B(d)(3), is an autonomous one for the purposes of European Union law. The making of that characterisation was properly a matter for the Court of Justice. [59] I can understand Axa's dismay about the course of events that unfolded in Luxembourg. The suggestion that Denplan's service was 'debt collection' had not been uttered in the domestic proceedings. Whilst Axa had asserted that Denplan's service fell within the exemptions and HMRC had argued the contrary, it was no part of HMRC's case that that was because it was a 'debt collection' service. I can, however, see no reason why the Court of Justice was not entitled, as it did, to hold that the true legal nature of Denplan's service was in fact 'debt collection' within the meaning of the carve out.”
“Debt collection by its nature can only be performed for the creditor.”
“[88] When construing a written agreement, the court has regard to all of the provisions of the contract. The court construes the agreement against the relevant background. The material which is admissible in relation to that background is everything which a reasonable man would regard as relevant and which would have affected the way in which a reasonable man would have understood the language used in the document: Investors Compensation Scheme Ltd v West Bromwich Building Society, Investors Compensation Scheme Ltd v Hopkin & Sons (a firm), Alford v West Bromwich Building Society, Armitage v West Bromwich Building Society[1998] 1 All ER 98 at 114 –115 ,[1998] 1 WLR 896 at 912–913. The relevant material is restricted to the material which would have been available to the parties. At the risk of stating the obvious, this last proposition means that the court cannot be influenced, when construing a written agreement, by material which would not have been available to the parties when they entered into that agreement. … [117] As I explained when I referred to the contracts which were made by the holidaymaker, there are essentially two relevant contracts. One is a contract between the holidaymaker and Med relating to the use by the holidaymaker of Med's website. The other contract is the relevant one, providing for a supply of hotel accommodation to the holidaymaker. As the holidaymaker enters into these two contracts at around the same time, the terms of these two contracts can be referred to as part of the relevant background when construing either contract. [118] There does not appear to be any other relevant background which is admissible as an aid to construing the contracts with the holidaymaker. In particular, the terms of the agreement between the hotel operators and Med are not admissible for this purpose because those terms would not be available to the holidaymaker. Further any course of dealing between the hotel operators and Med prior to the relevant holidaymaker contract would similarly not be available and not admissible. There does not appear to be any relevant course of dealing between Med and every holidaymaker after the holidaymaker contract is entered into. Even if there was some conduct in relation to a particular holidaymaker, for example, the making of a complaint and the settlement of that complaint by the payment of compensation, that information would not be available to other holidaymakers and would not be admissible as an aid to construction of those other holidaymakers' contracts. Even in relation to the holidaymaker who, in the example given, made the complaint and received the compensation, that conduct which is subsequent to that holidaymaker's contract is not admissible to construe the contract and the FTT made no finding that the original contract was superseded by a different contract for the supply of hotel accommodation, although there might have been a subsequent contract dealing with the payment of compensation. In this way, the true construction of the contracts with the holidaymakers turn upon the wording of the contracts themselves without the addition of any other material and they are not to be construed by reference to 'the behaviour' of Med as the FTT suggested.”
“[37] It is fair to say, I think, that the general trend of the recent authorities has been away from artificial splitting of transactions, and (where possible) towards a unitary or single classification which corresponds with the objective business reality of the transaction. The matter is looked at from the perspective of the average customer, not from the point of view of the supplier: see the reference to 'a typical consumer' in Levob at para 22, and compare the opinion of the Advocate General (Kokott) at para 69. One reason for looking at the question from the perspective of the customer is no doubt that it is the consideration provided by the customer for the supply which forms the taxable subject matter. … [43] … the authorities clearly indicate that the charging of a separate price for one element of a composite supply is not of itself decisive: see in particular Levob (Case C-41/04 )[2006] STC 766 ,[2005] ECR I-9433 , para 25 and the ECJ in Card Protection Plan (Case C-349/96 )[1999] STC 270 ,[1999] 2 AC 601 , para 31. In my judgment, this is just the kind of formalistic distinction which will usually have little, if any, part to play in the characterisation of a composite supply.”
“[42] ... What matters in the present context is not the education provided by the school to the child, but the supply of educational services by the school to the parent. The parent is paying the school to educate his child. Participation in the scheme affects the price which he pays for that service, and entitles him to a refund, or to a full remission of fees, in certain specified circumstances. However, it is still the child's education that the parent is paying for. The economic reality of the matter, in my judgment, is that the parent is provided by the school with two payment options for the same educational service. That is how a typical parent would view the matter, and that is the appropriate level of social and economic reality at which to examine the question. The parent is offered two different ways of paying for the child's education. In my judgment it really is as simple as that.”
“[14] … if a carrier has undertaken, in addition to the transport of the goods, to collect the price of the goods before delivering them to a consignee (cash-on-delivery system) the collection of that price is a service ancillary to the transport…”
“…art 13B(d)(1) of the Sixth Directive must be interpreted as meaning that a supplier of goods or services who authorises his customer to defer payment of the price, in return for payment of interest, is in principle making an exempt grant of credit within the meaning of that provision. However, where a supplier of goods or services grants his customer deferral of payment of the price, in return for payment of interest, only until delivery, that interest does not constitute consideration for the grant of credit but part of the consideration obtained for the supply of goods or services within the meaning of art 11A(1)(a) of the Sixth Directive.”
“As regard must be had to all the circumstances, no single factor will provide the sole test as to whether the supply in question is a distinct and independent supply or is incidental or ancillary to another principal supply. The fact that the price for the supply in question has been or can be separately identified as having been charged for additionally, as the tribunal held after considering the sample transactions in this case, is not the test. Nor is the fact that the supply in question is an optional one which the taxable person could have provided for himself, and so did not need to take when as a matter of convenience he took the other supply to which it is said to have been ancillary. The Court of Appeal ([1998] STC 544 at 547 per Nourse LJ) attached considerable importance to this point, as also did the tribunal (see p 16) and Dyson J (see[1997] STC 475 at 480 ). But in my opinion it is just one of the factors to be taken into account in the examination of all the circumstances. … It may be said that before the supply can be regarded as a separate and distinct supply it must, at least to some degree, be physically and economically dissociable from the other supply. But it would not be right to take this factor as the sole criterion as to whether the supply was separate and distinct from the other supply or was merely incidental or ancillary to it. If that were so, it would mean that in every case where it was possible to dissociate the two economically and physically (for example, because one supply was of goods and the other supply was of services and the price for each supply could be separately identified) the two supplies would have to be treated as separate supplies for VAT purposes. That would not be consistent with the guidance which the Court of Justice gave in Card Protection Plan Ltd v Customs and Excise Comrs (Case C-349/96 )[1999] STC 270 at 293, para 29 that a supply which comprises a single service from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system.”
“[22] It is clear from the Court of Justice's judgment that the national court's task is to have regard to the 'essential features of the transaction' to see whether it is 'several distinct principal services' or a single service and that what from an economic point of view is in reality a single service should not be 'artificially split'. It seems that an overall view should be taken and over-zealous dissecting and analysis of particular clauses should be avoided.”
“It appears that when the authorisation code is received by T-Mobile, T-Mobile does not know if it comes from the bank [ie the card issuing bank] or from Barclays [ie the merchant acquirer] Mr Steller did not know if the settlement files which were batched up by Solve/SE and sent to BMS included the authorisation code or not. It appears that all T-Mobile is doing is giving back to Barclays the authorisation codes which Barclays has obtained. No transfer of funds has taken place at this stage, it being assumed by T-Mobile that the transaction will proceed. It is only when the information has been sent to the issuing banks that money is received.”
“It was held in Bookit that by obtaining authorisation codes direct from the card issuers, Bookit was doing something that normally a bank would do, as in the cases of SDC and FDR . This was not the case with T-Mobile. Bookit was not just transmitting the information, but was also obtaining the authorisation codes. The Court of Appeal in Bookit upheld the finding of the Vice Chancellor in the High Court that Bookit's card processing transactions did come within the exemption by reason of the crucial fact that Bookit, having obtained authorisation codes directly from the relevant credit and debit card issuing banks, then transmitted those codes on to its merchant acquirer bank (Giro bank), which had the effect of making a transfer of funds inevitable. Accordingly the Court of Appeal held that Bookit's transactions have the two essential characteristics of an exempt financial transaction: they had "the effect of transferring funds" and "entail[ed] changes in the legal and financial situation". In the present case Barclays obtains the authorisation codes, and confirms this is done by copying the code to T-Mobile. When T-Mobile collects up the data, including the authorisation codes, that information has not been obtained by T-Mobile, but obtained by Barclays. We accept the Commissioners' argument that Bookit may be distinguished from the present case in that it was performing a task which Giro bank was obliged under its standard Merchant Services Agreement to carry out. Bookit had secured a significant discount on Giro bank's merchant acquirer charges by agreeing itself to obtain authorisation codes directly from the issuing banks and to pass those codes onto Giro bank. Giro bank was, therefore, outsourcing an element of its merchant acquirer services with the customer, and remunerating that customer by way of a discount on the charges which that customer had to pay. In the present case T-Mobile has no direct contact with the card issuer banks at all, and is not, unlike Bookit, performing a job which the banks would otherwise be performing. The fact that Bookit had secured a discount on Giro bank's merchant acquirer charges shows that Giro bank was outsourcing an element of its merchant acquirer services to Bookit, and giving Bookit a discount for so doing. In the present case T-Mobile gave Barclays the job of obtaining the authorisation codes and it is Barclays which is in the position of Bookit, not T-Mobile. In Axa the tribunal expressed surprise that where in relation to a debit card transaction the customer's bank rejected the debit, for example because the account was in overdraft, and Girobank re-credited the card issuer and charged back the debit to Bookit, the court held that this potential reversal of payments did not mean that Bookit had not made the transfer. In the present case when a payment method goes wrong T-Mobile has to perform a number of administrative tasks which fall outside the exemption. ”
“T-Mobile was doing nothing of substance different from that which other traders with significant turnovers do as a matter of course: receiving payments from their customers by a number of methods, including cash, cheque, and credit or debit cards, or directly or through an agent (such as Post Office Ltd or Pay point). The "payment handling services" provided by T-Mobile were not, therefore, "by their nature, financial services, nor were the transactions carried out by T-Mobile transactions relating "to the sphere financial transactions". They neither have the effect of transferring funds, nor do they effect changes in the legal and financial situation. We do not consider it to be the fact that T-Mobile is `negotiating payment terms between two parties' as per HMRC Business Brief 30/2003. It is simply accepting a payment which it has previously agreed with its customer. …”
“[51] As to the effect of the ruling in the present case, in my judgment, it is clear that the Court of Justice concluded that the words 'debt collection' in the carve out have a meaning capable of being applied to 'transactions concerning payments' within the exemption in art 13B(d)(3) (see[2010] STC 2825 , para 28 of the judgment, last sentence). It then has to be decided whether the actual transaction in question falls within the exemption or the carve out, and this will depend on its precise facts. If it falls within the exemption it will fall outside the carve out, and vice versa (see final sentence of para 28). The Court of Justice does not define the purpose of the exemption. It is unnecessary to decide on this appeal what the full scope of the exemption might be. However, for the purposes of this judgment it may hypothetically be taken to be normal retail banking activities (and indeed that is one way of reading paras 24 to 27 of the judgment of the Court of Justice in Nordea ([2011] STC 1956 )). On that hypothesis, the carve out takes out of the scope of the exemption any separate supply of services which is more properly regarded as a service of debt collection.”
“28. In order to determine whether swift services satisfy that criterion it is necessary to examine, first, whether the provision of those services is capable of giving rise to changes of a legal and financial character similar to those resulting from interbank payments or transactions in securities themselves and, second, whether SWIFT's responsibility towards its clients is limited to technical aspects or whether it extends to specific, essential aspects of those financial transactions.”
“32. It is also not disputed that, although orders for transfers of funds or those which are intended to effect certain transactions in securities must be transmitted via computer systems approved by SWIFT in order to guarantee their security, ownership rights as regards those funds or, as the case may be, those securities is transferred only by the financial institutions themselves in the context of legal relations with their own clients. 33. It is also clear from the case law cited in paras 24 to 26 of this judgment that the legal and financial changes which are such as to characterise a transaction exempt from VAT result only from the transfer of ownership, actual or potential, in funds or securities, without it being necessary for the transaction thereby performed to be effective against third parties. 34. Accordingly, if swift services are electronic messaging services which are simply intended to transmit information, they do not by themselves perform any of the functions of one of the financial transactions referred to in art 13B(d)(3) and (5) of the Sixth Directive, that is to say those which have the effect of transferring funds or securities, and do not therefore possess the character of such transactions.”
“The relevant questions are (i) what services were supplied by Bookit to the customer and (ii) did those services attract the exemption for which art 13B(d)(3) provides.”
“(1) whether, on a proper view of the evidence, the booking fee is charged for the facility of paying by credit card or by debit card, and not for some other facility; and (2) if so, whether the booking fee falls within the scope of the exemption from value added tax … provided for by the legislation ...”
“Both in fact and in law the appellant provides two separate services to customers who pay for tickets by credit card or debit card. The appellant acts as agent for the promoter in selling the ticket, and as principal in charging the booking fee for taking the steps necessary to effect payment by credit card or debit card. While the customer might not be aware of the detail by which this might be effected, he or she is aware that there are two charges, one for the price of the ticket and the other for the facility of payment by credit card or debit card.”
“Booking fees are charged … to help offset operational costs such as postage, credit card commission, labour, telephony and IT maintenance charges…. Booking fees are charged to help offset the ongoing maintenance and development costs of the Internet Booking facility, as well as the usual operational costs.”
“For concerts … staged at venues of The NEC Group, the Group chooses to waive the booking fee if the tickets are purchased at a Group venue box office using … debit card.”
“… receiving the authorisation codes from the card issuers…”
“[55] With regard to the tribunal's reasoning, HMRC first submit that the authorities do not support the proposition distilled from them by the tribunal in para 21 of the decision. The only authority which did not involve a party which was clearly within the banking sphere was Bookit , but Bookit was a case that turned on its own special facts. Girobank had outsourced certain of its own functions to Bookit (namely, the functions of obtaining, in respect of each transaction, an authorisation code from the relevant card issuer bank). Accordingly, Bookit was not simply giving instructions to Girobank, but had effectively stepped into the banking system by performing tasks that would normally have been carried out within that system. In consideration for performing those tasks, Bookit received a discount on its merchant acquirer fees.”
“[47] … the decision in Bookit does not in my judgment depend on Bookit itself having actually 'made' the transfer. It is enough that the information and other material transmitted by Bookit to Girobank had the effect of causing a transfer to be made by Girobank to Bookit in accordance with the provisions of the MSA.” … [69] HMRC argue for a narrow interpretation of the exemption in art 13B(d)(3) which would confine its ambit, in cases where the supplier of the service in question is not itself a bank or other institution, to a person which supplies services analogous to those supplied by a bank or financial institution. In my judgment, however, this approach is too narrow and is not warranted by the authorities. In particular, it does not do justice to the potential width of the reasoning of the ECJ in SDC , or to the decisions of the High Court and the Court of Appeal in Bookit . [70] I have already set out (see at [30] above) some of the main principles which are in my view established by SDC . One of those principles is that it does not matter who provides the service, and the judgment provides three examples of cases where a transfer is effected (or caused to be effected) without any direct involvement of a bank at all (see[1997] STC 932 ,[1997] ECR I-3017 , para 54 of the judgment). Another of those principles is that the test of what constitutes a transfer is a functional one, the crucial ingredient being that a transfer consists of the execution of an order for the transfer of a sum of money from one bank account to another (para 53 of the judgment). Execution of such an order will entail a change in the legal and financial situation existing between the person giving the order and the recipient, and between those parties and their respective banks (ibid). [71] It is important to remember at this point that the exemption under art 13B(d)(3) is not confined to transactions which themselves constitute transfers or payments of money. On the contrary, the exemption extends to transactions 'concerning' transfers or payments. The degree of connection which must exist between the transaction for which exemption is claimed and the underlying transfer or payment was explored in paras 61 and following of the judgment of the ECJ in SDC , and the answer given in para 66 was that the services provided must 'form a distinct whole' which fulfils 'the specific, essential functions' of a transfer. Thus to qualify as a transaction concerning transfers, the service provided must 'have the effect of transferring funds and entail changes in the legal and financial situation'. Whether the services in any particular case have such an effect is in my judgment essentially a question of causation. In the interests of clarity, I would stress that the question is not what has caused the transaction which effects the transfer, which is irrelevant (see[1997] STC 932 ,[1997] ECR I-3017 , para 53 of the judgment, 'irrespective of its cause'), but whether the transaction carried out by the service provider has truly effected, in the sense of brought about, a transfer. The causal nature of the test is brought out both by the use of the verb 'effect', which has a strong causal connotation, and by the reference in para 54 to cases where a customer ' causes a transfer to be effected' (my emphasis). [72] Bookit seems to me to be a good example of a case where the causal test was applied and answered in the taxpayer's favour, even though the taxpayer operated wholly outside the banking system, and even though it was not the taxpayer itself which actually made the transfer. What mattered was that the information supplied by Bookit to Girobank inevitably brought about (although it did not itself constitute) a transfer of sums of money from Girobank to Bookit. The person who actually made the transfer was Girobank, pursuant to its obligations under the MSA. It did not make the transfer as agent or on behalf of Bookit. Nevertheless, Bookit effected the transfer, because within the contractual framework established by the parties the information transmitted by Bookit to Girobank was all that was needed to trigger the making of the transfer by Girobank to Bookit. [73] I agree with Mr Peacock QC [counsel for the taxpayer] that Bookit cannot sensibly be distinguished on the basis that Bookit was performing an 'outsourced' banking function (I confess that I share the dislike of Laws LJ for that 'barbarous expression'—see FDR ([2000] STC 672 , para 11)—useful though it may be as shorthand for procuring from an outside source). Not only is clear evidence for this outside procurement lacking, but any attempt to marginalise Bookit on this basis as a case turning on its own particular facts would in my view be an unprincipled exercise in damage limitation.”
“[29] While there is less detailed information in the tribunal's findings in fact in the present case about the means by which information is transmitted by the appellant to Cardnet and by which Cardnet transmits payment to the appellant than there was in Bookit , there is no reason to think that the mechanism in its main features is any different in the two cases. The facility for payment by credit card or debit card effects a change in the legal and financial situation, whereby money is transferred from the customer to the appellant, within the meaning of SDC , as further explained in FDR . The four components referred to by Chadwick LJ in Bookit[2006] STC 1367 at [35] appear to us to be present in this case, mutatis mutandis. To adapt what he said (at [46]) there can be no doubt that, in requesting and accepting the appellant's services, the customer contemplates that some payment will be made which will enable him or her to obtain the tickets which are requested, and intends that the appellant will arrange for that. In some respects, the present case is a fortiori of Bookit , because the appellant and the promoter are not part of the same corporate group and the relationship between them is solely contractual. As a result of the transaction between the appellant and the customer there is a change in the legal and financial situation existing between them: SDC , as explained in FDR . Further, whereas in Bookit the underlying contractual arrangement to enable payment to be made by credit card (the Merchant Services Agreement) was entered into by Odeon (and its subsidiary, Bookit) with Girobank, in the present case the appellant itself entered into the necessary underlying agreement (with Cardnet) in order to provide customers with the relevant payment facilities (for which facilities the relevant charges were, as we have found, made). It is thus perhaps even more difficult to describe the service provided as a mere physical or technical supply. In any event, even if this is wrong, it appears to us that the actings of the appellant constitute negotiation, as that concept was explained in CSC . [30] For these reasons the second question falls to be answered in the affirmative; the booking fee falls within the scope of the exemption as constituting a transaction concerning transfer, and in any event negotiation concerning transfer.”
“[50] It is apparent that the precise scope of the exemption and [debt collection] carve out is unclear, and will require further definition in the future. However, the authoritative determination of what falls within the exemption and the carve out is within the jurisdiction of the Court of Justice. If there is any ambiguity, therefore, it can be cured by a further reference to the Court of Justice in a future case. …”