“In my experience, the practice of making assessments in advance of a governance board decision, in order to protect HMRC’s position in relation to assessment time limits, including the 2 year period under s 73(6)(a) VATA, is not at all unusual and not contrary to HMRC’s governance requirements.”
“I can’t recall any previous cases where this situation has arisen, and it isn’t covered in the AHP [Avoidance Handling Process] manual, so can you provide a steer on whether the protective assessment can be issued in advance of submission of the Gateway 2 settlement strategy to AAB?”
“In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.”
“(1) Council Directive 2006/112/EC (3) sets out rules on the time and place of supply of goods and services, the taxable amount, the chargeability of value added tax (VAT) and the entitlement to deduction. Those rules are, however, not sufficiently clear or comprehensive to ensure consistency in the tax treatment of transactions involving vouchers, to an extent which has undesirable consequences for the proper functioning of the internal market. (2) To ensure certain and uniform treatment, to be consistent with the principles of a general tax on consumption exactly proportional to the price of goods and services, to avoid inconsistencies, distortion of competition, double or non-taxation and to reduce the risk of tax avoidance, there is a need for specific rules applying to the VAT treatment of vouchers. (3) In view of the new rules on the place of supply for telecommunications, broadcasting and electronically supplied services which are applicable since1 January 2015 , a common solution for vouchers is necessary in order to ensure that mismatches do not occur in respect of vouchers supplied between Member States. To this end, it is vital to put in place rules to clarify the VAT treatment of vouchers. (4) Only vouchers which can be used for redemption against goods or services should be targeted by these rules. However, instruments entitling the holder to a discount upon purchase of goods or services but carrying no right to receive such goods or services should not be targeted by these rules. (5) The provisions regarding vouchers should not trigger any change in the VAT treatment of transport tickets, admission tickets to cinemas and museums, postage stamps or similar. (6) So as to identify clearly what constitutes a voucher for the purposes of VAT and to distinguish vouchers from payment instruments, it is necessary to define vouchers, which can have physical or electronic forms, recognising their essential attributes, in particular the nature of the entitlement attached to a voucher and the obligation to accept it as consideration for the supply of goods or services. (7) The VAT treatment of the transactions associated with vouchers is dependent upon the specific characteristics of the voucher. It is therefore necessary to distinguish between various types of vouchers and the distinctions need to be set out in Union legislation. (8) …For multipurpose vouchers, it is necessary to clarify that VAT should be charged when the goods or services to which the voucher relates are supplied. Against this background, any prior transfer of multi-purpose vouchers should not be subject to VAT. (9)-(10) … (11) In the case of multi-purpose vouchers, to ensure that the amount of VAT paid in respect of multi-purpose vouchers where VAT on the underlying supply of goods or services is charged only upon redemption is accurate, without prejudice to Article 73 of Directive 2006/112/EC, the supplier of the goods or services should account for the VAT based on the consideration paid for the multi-purpose voucher. In the absence of such information the taxable amount should be equal to the monetary value indicated on the multi-purpose voucher itself or in the related documentation, less the amount of VAT relating to the goods or services supplied. Where a multi-purpose voucher is used partially in respect of the supply of goods or services, the taxable amount should be equal to the corresponding part of the consideration or the monetary value, less the amount of VAT relating to the goods or services supplied. (12) This Directive does not target the situations where a multi-purpose voucher is not redeemed by the final consumer during its validity period, and the consideration received for such voucher is kept by the seller.”
“(1) ‘Voucher’ means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services and where the goods or services to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument (2) ‘single-purpose voucher’ means a voucher where the place of supply of the goods or services to which the voucher relates, and the VAT due on those goods or services, are known at the time of issue of the voucher; (3) ‘multi-purpose voucher’ means a voucher, other than a single-purpose voucher.”
“1. Each transfer of a single-purpose voucher made by a taxable person acting in his own name shall be regarded as a supply of the goods or services to which the voucher relates. The actual handing over of the goods or the actual provision of the services in return for a single-purpose voucher accepted as consideration or part consideration by the supplier shall not be regarded as an independent transaction. Where a transfer of a single-purpose voucher is made by a taxable person acting in the name of another taxable person, that transfer shall be regarded as a supply of the goods or services to which the voucher relates made by the other taxable person in whose name the taxable person is acting. Where the supplier of goods or services is not the taxable person who, acting in his own name, issued the single purpose voucher, that supplier shall however be deemed to have made the supply of the goods or services related to that voucher to that taxable person. 2. The actual handing over of the goods or the actual provision of the services in return for a multi-purpose voucher accepted as consideration or part consideration by the supplier shall be subject to VAT pursuant toArticle 2, whereas each preceding transfer of that multi-purpose voucher shall not be subject to VAT. Where a transfer of a multi-purpose voucher is made by a taxable person other than the taxable person carrying out the transaction subject to VAT pursuant to the first subparagraph, any supply of services that can be identified, such as distribution or promotion services, shall be subject to VAT.”
“Without prejudice to Article 73, the taxable amount of the supply of goods or services provided in respect of a multi-purpose voucher shall be equal to the consideration paid for the voucher or, in the absence of information on that consideration, the monetary value indicated on the multi-purpose voucher itself or in the related documentation, less the amount of VAT relating to the goods or services supplied.”
“Member States shall adopt and publish, by31 December 2018 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive…They shall apply those provisions from1 January 2019 .”
“The consideration for the voucher is disregarded (except to the extent to which it exceeds the face value) (para 3(2)), in which case tax is charged on the goods or services for which the voucher is redeemed according to their VAT categorisation. Not only is the time of supply deferred until the voucher is redeemed but the fact that the issue of the voucher is a separate taxable supply of a right is also effectively disregarded in favour of the VAT categorisation of the ultimate supply made on redemption of the voucher.”
“(1) This paragraph gives the meaning of other expressions used in this Schedule. (2) ‘Relevant goods or services’, in relation to a voucher, are any goods or services for the provision of which the voucher may be accepted as consideration. (3) References in this Schedule to the transfer of a voucher do not include the voucher being offered and accepted as consideration for the provision of relevant goods or services. (4) References in this Schedule to a voucher being offered or accepted as consideration for the provision of relevant goods or services include references to the voucher being offered or accepted as part consideration for the provision of relevant goods or services.”
“(1) The issue, and any subsequent transfer, of a voucher is to be treated for the purposes of this Act as a supply of relevant goods or services. (2) References in this Schedule to the ‘paragraph 3 supply’, in relation to the issue or transfer of a voucher, are to the supply of relevant goods or services treated by this paragraph as having been made on the issue or transfer of the voucher.”
“(1) This paragraph applies where a single purpose voucher is accepted as consideration for the provision of relevant goods or services. (2) The provision of the relevant goods or services is not a supply of goods or services for the purposes of this Act. (3) But where the person who provides the relevant goods or services (the "provider") is not the person who issued the voucher (the "issuer"), for the purposes of this Act the provider is to be treated as having made a supply of those goods or services to the issuer.”
“6. A voucher is a multi-purpose voucher if it is not a single purpose voucher. 7. (1) Any consideration for the issue or subsequent transfer of a multi-purpose voucher is to be disregarded for the purposes of this Act. (2) The paragraph 3 supply made on the issue or subsequent transfer of a multi-purpose voucher is to be treated as not being a supply within section 26(2). 8. (1) Where a multi-purpose voucher is accepted as consideration for the provision of relevant goods or services, for the purposes of this Act— (a) the provision of the relevant goods or services is to be treated as a supply, and (b) the value of the supply treated as having been made by paragraph (a) is determined as follows. (2) If the consideration for the most recent transfer of the voucher for consideration is known to the supplier, the value of the supply is such amount as, with the addition of the VAT chargeable on the supply, is equal to that consideration. (3) If the consideration for the most recent transfer of the voucher for consideration is not known to the supplier, the value of the supply is such amount as, with the addition of the VAT chargeable on the supply, is equal to the face value of the voucher. (4) The ‘face value’ of a voucher is the monetary value stated on or recorded in— (a) the voucher, or (b) the terms and conditions governing the use of the voucher.” (2) The paragraph 3 supply made on the issue or subsequent transfer of a multi-purpose voucher is to be treated as not being a supply within section 26(2). (a) the provision of the relevant goods or services is to be treated as a supply, and (b) the value of the supply treated as having been made by paragraph (a) is determined as follows. (2) If the consideration for the most recent transfer of the voucher for consideration is known to the supplier, the value of the supply is such amount as, with the addition of the VAT chargeable on the supply, is equal to that consideration. (3) If the consideration for the most recent transfer of the voucher for consideration is not known to the supplier, the value of the supply is such amount as, with the addition of the VAT chargeable on the supply, is equal to the face value of the voucher. (4) The ‘face value’ of a voucher is the monetary value stated on or recorded in— (a) the voucher, or (b) the terms and conditions governing the use of the voucher.”
“9. DSAB is the company which sells the card at issue in the main proceedings to tourists visiting the city of Stockholm (Sweden). 10. That card gives a cardholder the right to be admitted to around 60 attractions, such as sights and museums, for a limited period of time and up to a certain value. It also gives a cardholder access to around 10 passenger transport services, such as tours provided by DSAB’s own ‘Hop-on-Hop-off’ buses and boats, as well as sightseeing tours with other organisers. Some of those services are subject to VAT at rates ranging from 6% to 25%, while others are tax exempt. The cardholder uses the card at issue in the main proceedings as a means of payment for admission to or use of a service and does not pay any supplement, since that card is simply presented to a special card-reader. Under a contract concluded with DSAB, the supplier of services then receives from the latter, in respect of each admission or use, consideration equal to a percentage of the normal price of admission or use. The supplier of services is not obliged to grant the cardholder access to its services more than once. DSAB does not guarantee any minimum number of visitors. If the value limit of the card is reached, it can no longer be used by the cardholder. 11. The card at issue in the main proceedings exists in several versions, with different validity periods and value limits. Thus, a card for an adult with a 24-hour validity period costs 669 kronor (SEK) (approximately EUR 65). During that validity period, the cardholder may use that card as a means of payment amounting to SEK 1 800 (approximately EUR 176). That validity period starts to run when the card is used for the first time. That card must be used within one year of purchase.”
“19. The parties primarily disagree as to whether the city card is to be considered a voucher at all. On the one hand, the Tax Agency is of the opinion that the card at issue is not a voucher, because it has a high value limit and a short validity period, which makes it certain that the average consumer will not make full use of the card. 20. On the other hand, DSAB Destination Stockholm takes the view that the card is a voucher because suppliers are obliged to accept it as consideration.”
“…there is nothing in the definition of ‘voucher’ that requires that all the relevant services (or goods) have to be redeemed, for an instrument to be considered a voucher. Instruments which allow all listed goods and services to be redeemed (for example, retail outlet vouchers) are indeed vouchers if they are to be accepted as consideration. However, the requirement that all goods and services be redeemed is not a condition which makes an instrument a voucher. Quite the opposite, as explained above: part of the definition of ‘voucher’, stating that it includes the right to the provision of listed goods and services, was not included in the final version of the 2016 Directive. That is an additional argument in favour of the interpretation that the legislature rejected a condition that all services must be exhausted for the instrument to be treated as a voucher. Therefore, the fact that the short duration of city cardsusually does not enable cardholders to use all the services listed does not alter the finding that, for VAT purposes, a city card is a voucher.”
“The purpose of that recital is, to my mind, to make it clear that the possibility of acquiring tickets, postage stamps or similar by means of a voucher should not alter the VAT rate applicable to such tickets, some of which are exempted while others benefit from reduced rates. Vouchers only create a possibility to acquire a ticket and create the obligation for the supplier of such a ticket to accept vouchers as consideration. It does not in any way alter the VAT scheme applicable to such tickets. If a ticket is VAT exempt, VAT will not be charged, irrespective of whether the supplier accepted money, other payment instruments or a voucher as consideration.”
“an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services and where the goods or services to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument.”
“22. In the present case, it is apparent from the order for reference that those two conditions would appear to be satisfied, which is, however, a matter for the referring court to ascertain. 23. In so far as concerns the argument, put forward by the tax authorities, that the card at issue in the main proceedings cannot constitute a ‘voucher’, within the meaning of Article 30a(1) of the VAT Directive, on the ground that it is impossible for an average consumer to take advantage of all the services offered, having regard to the limited validity period of that card, it must be held that such an argument cannot be accepted. 24. As the Advocate General observes, in essence, in point 57 of her Opinion, it is not apparent from the definition of ‘voucher’ set out in Article 30a(1) of the VAT Directive that the validity period of the card concerned or the possibility of taking advantage of all the services covered by that card are relevant elements for the purposes of classifying that card as a ‘voucher’ within the meaning of that provision. 25 Furthermore, contrary to what the Italian Government submits in its written observations, the issuance of an instrument such as the card at issue in the main proceedings cannot be classified as a ‘single provision of services’, in the light of the diversity of the services offered and of third-party economic operators acting as suppliers of services. 26. Such a classification would, moreover, be contrary to the objective expressed in recital 5 of Directive 2016/1065, since it would result in the imposition of a single rate of tax on services such as transport or museum admissions, which are subject to different rates of VAT or which are exempt from that tax. Such a classification could also lead to double taxation of the services concerned, even though the purpose of Directive 2016/1065 was, inter alia, to prevent such double taxation, as is clear from recital 2 of the latter directive. 27. In those circumstances, and subject to the verification referred to in paragraph 22 of the present judgment, it appears to be possible to classify the card at issue in the main proceedings as a ‘voucher’ within the meaning of Article 30a(1) of the VAT Directive.”
“Article 30a of Council Directive 2006/112/EC of28 November 2006 on the common system of value added tax, as amended by Council Directive (EU) 2016/1065 of27 June 2016 , must be interpreted as meaning that an instrument which gives the bearer thereof the right to benefit from various services at a given place, for a limited period and up to a certain amount, may constitute a ‘voucher’ within the meaning of Article 30a(1) of that directive, even if, on account of the limited validity period of that instrument, an average consumer cannot benefit from all the services offered. That instrument constitutes a ‘multi-purpose voucher’ within the meaning of Article 30a(3) of that directive, since the value added tax due on those services is not known at thetime of issuance of that instrument.”
“Owner agrees that, on each and every occasion on which a valid London Pass (or mobile confirmation) is presented at the Facility, Owner will grant the right of admission to the Facility to LPG, to enable LPG to transfer such a right in its own name, to the Bearer.”
“LPG will pay the Owner the Contracted Admission Fee, as set out in Schedule 2 hereto, in respect of each right of admission granted on the occasion of a presentation of a valid Pass…”
“Each London Pass is subject to a credits value based on the duration of the Pass. The credits value is a maximum amount you’re able to use based on the standard gate price for each attraction. For example, with a 6 day adult London Pass (Price:£154 ) you can visit attractions up to the total attraction cost of£605 …if you want to check your remaining credits value, you can call our Customer Service team on [number].”
“The Pass entitles the holder to admission to listed attractions and services (“Attractions”) upon presentation without further payment, together with other offers and discounts where appropriate (“Special Offers” and/or “Pass Holder Offers”). Admission to Attractions is subject to the credits package being valid and to there being sufficient value remaining. All Attractions are required to accept admission as outlined in the attraction offer for the product purchased, subject to their normal admission criteria.”
“Each pass is subject to a maximum credits value and you are unable to exceed this. 1 credit is worth£1 and your credits are redeemed when you enter attractions, reducing by the amount of the standard gate price of the attraction you enter.”
“we do have unresolved concerns about the VAT treatment of transactions involving the London Pass (and the London Explorer Pass – see below) and we have to make sure that no tax would be lost due to the expiry of VAT assessment time limits…While our concerns remain unresolved, we might find it necessary to make assessments in order to protect our position as and when we approach the relevant VAT assessment time limits. From the information we have, this might become necessary early in 2021.”
“You will appreciate that I need to fully understand the reasoning behind the VAT treatment which you appear to have adopted, before I can come to a view as to whether or not it is correct.”
“What is the proper characterisation of the sale of the London Pass and the London Explorer Pass for VAT purposes? Is the sale of the pass outside the scope of VAT as the business contends, or is it a multi-purpose voucher (for Schedule 10B purposes) or alternatively is it taxable at the standard rate at point of sale?”
“Our analysis suggests that the formal terms of the LP and LEP, the formal contractual arrangements with the attractions, and the case law referred to below, all arguably support the VAT treatment applied by LPG, such that a challenge would not necessarily be easy to mount. Additionally, there are respectable arguments for treating the LP and LEP as multi-purpose vouchers for the purposes of Schedule 10B (which would achieve the same VAT effect as the treatment currently applied), notwithstanding the fact that LPG currently disavows any reliance on Schedule 10B. On the other hand, the effect of that VAT treatment produces a significant divergence between the amounts of consideration paid by consumers for passes, and the far lesser amounts treated as consideration for taxable supplies of admission to attractions. This is because for the typical user of the LP at least, the credits value limit is never reached. In theory an even higher credits value limit could be set without any significant impact on redemptions, and increasing the limit would further reduce the amounts treated as consideration for admissions. It does appear that LPG have set the credits value limit for the LP as high as possible to ensure that while it still remains theoretically possible for a particularly energetic tourist to exhaust it, it does not in practice limit the usage of the pass for the vast majority of pass holders (hence the reference to ‘unlimited access’ on the website home page). Therefore, it is hard not to see the VAT outcome as distortive and contrary to the general principle of VAT as a tax on final consumption, proportionate to the price actually paid by the final consumer.”
“The difficulty for us is that case law such as Macdonald Resorts and FindMyPast provides a seemingly solid basis for the tax treatment applied by LPG. However, the recent reference in DSAB Destination Stockholm could be taken as a signal for us to challenge LPG and assess for under-declared output tax (even if only on a protective basis). We would respectfully propose that a legal opinion be sought from SOLS B Advisory. Whatever position we decide to take will be subject to AAB governance, and also most likely to CCG DRB governance (due to the amount of tax at risk). Those panels are likely to take an interest in SOLS legal opinion.”
“The tax outcome argued for by the taxpayer is clearly unpalatable to HMRC, but it may not be easy to challenge under existing law… The recent Swedish reference to the CJEU in DSAB Destination Stockholm is timely, and it could lend legitimacy to a challenge, even if we consider our prospects of success are poor. I strongly recommend seeking advice on the matter from SOLS Advisory, not only because of the legal difficulty of the case but because AAB will have to endorse whatever approach we decide we want to recommend.”
“The matter was referred to the relevant Policy team for their consideration last Tuesday. HMRC’s final position on the issue will also be subject to internal governance processes. I will update you on this in due course. We are also considering whether we might need to make assessments to protect HMRC’s position in the interim, and we will be contacting you about this within the next few weeks.”
“Whilst I have asked for information covering two years, at present I only intend to raise assessments as and when necessary to prevent the periods going out of time.”
“LPG would like to reiterate its view that the VAT treatment applied to its supplies of credits packages is correct and in line with settled case law. As it appears that HMRC has yet to fully understand the way in which the credits packages operate, we would be happy to facilitate a discussion with you and/or HMRC’s policy team eg by way of a video call, to enable HMRC to ask any questions it may have and reduce the need for further protracted correspondence.”
“…in respect of VAT period 03/19, in order to protect HMRC from running out of time under the 2 year rule. The assessment will not be enforced pending completion of governance processes, and the customer’s rights of review and appeal will be extended under s 83D, VATA 1994. If governance is still pending at the end of June, a similar assessment may need to be made in respect of VAT period 06/19.”
“If you are issuing assessments to protect HMRC’s position as time limits are approaching, and whilst further work continues to fully explore our position and to ensure that we fully understand the customer’s, the issue does not need to be referred to the DRB at this point. This would change if the customer requests a review of the assessments or makes an appeal to the Tribunal.”
“I believe you have not declared the correct amount of VAT due for the period shown on the enclosed schedule. This is because the sale of the London Pass and the London Explorer Pass have been treated as outside the scope of VAT. I have made this assessment on the basis that sales of the passes are subject to VAT at the standard rate. HMRC’s final position on this matter has yet to be confirmed and is subject to an internal governance process. However, as we are now approaching the time limit for raising assessments under section 73(6) of the VAT ACT 1994, in order to protect HMRC’s position, I have made an assessment of VAT due undersection 73 of the VAT Act 1994 . This letter is our notice of the assessment. Please note that this is not a fully considered decision on the VAT treatment of LPG’s supplies as my enquiry is ongoing. My fully considered decision will be set out in a decision letter which will be issued to you in due course. The assessments referred to in this letter are made solely for administrative purposes. HMRC will not pursue collection of the tax due until such time that a reasoned decision has been made.”
“your review/appeal rights are protected throughout the duration of the investigation…You will not be required to pay, and HMRC will not take action to enforce the assessment, until after the decision letter is issued.”
“The VAT assessment was notified because legislation directs that VAT assessments are required to be made and notified within strict legal time limits.The VAT assessment is a separate appealable decision, so I am able to undertake a review of the VAT assessment, without reference to the principal decision.”
“The principal decision has not yet been finalised, so is not under review.Consequently, the VAT assessment for output tax you are considered to have understated has been made and notified to protect HMRC’s position before a fully considered decision has been made.”
“In summary, therefore, my decision is that the supply of the London Pass is a taxable supply of a sightseeing package, meaning that VAT is due on the full consideration paid at the time of purchase. The purchase of a pass enables the holder to obtain a choice of specified services within a specified period for a fixed price. I have also decided that the sale of the pass is the only supply which LPG makes to passholders, and that, as a matter of economic reality, LPG does not make subsequent supplies of admissions.”
“Where…it appears to the Commissioners that [a person’s] returns are…incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him.”
“where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him”
“‘the Commissioners’ (or ‘HMRC’) and the officers of Revenue & Customs are simply different manifestations of the persons required and authorised to exercise the statutory function of collecting tax.”
“We would respectfully propose that a legal opinion be sought from SOLS B Advisory. Whatever position we decide to take will be subject to AAB governance, and also most likely to DRB governance…” (5) Officer Levy added (again, our emphasis) “The tax outcome argued for by the taxpayer is clearly unpalatable to HMRC, but it may not be easy to challenge under existing law…I strongly recommend seeking advice on the matter from SOLS Advisory, not only because of the legal difficulty of the case but because AAB will have to endorse whatever approach we decide we want to recommend.”
“My view at the time the assessment was raised was that the Appellant’s VAT return for 03/19 was incorrect and that output tax for this period had been understated.”
“I had by this time formed the view that the Appellant’s position should be challenged on the basis that the sale of the Passes were standard-rated taxable supplies made in consideration for the total payment received from the purchaser, with a time of supply no later than the time of receipt of payment for the Pass. I had formed the view that the Appellant’s VAT returns should not be regarded as correct.”
“[18] Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs…. [19] The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events… [20] Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial…The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events. [21] … [22] In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.”
“The test is exclusively an objective one: how would the document or documents said to record an assessment be understood by the reasonable reader? It is essential to the fair administration of the tax system that a taxpayer should be able to know with certainty whether or not an assessment has been made of an amount of VAT due from him. There would be very considerable uncertainty if the question whether an assessment has been made were to depend on the subjective intentions and beliefs of individual officers of HMRC.”
“the crucial question in the present appeal is what was the true meaning of the two letters of 6 and7 October 2008 : when objectively construed did they record the fact that an “assessment” had been made and notify the Appellant of that fact?”
“Where an amount has been assessed and notified to any person under subsection (1)…above it shall, subject to the provisions of this Act as to appeals, be deemed to be an amount of VAT due from him and may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.”
“HMRC makes protective assessments to protect revenue at risk in ongoing litigation where the law is currently against us…You will need to consider a protective assessment when HMRC is contesting a court judgment.”
“An assessment raised solely because the time limit for assessing is imminent is not a protective assessment. Assessments raised in such circumstances are simply normal assessments and should be enforced in the normal way.”
“Although there is no legal definition of what ‘an assessment has been made’ means, the courts have interpreted the law to mean that an assessment is made once you have finished calculating the amount of tax due and a final decision to assess that amount has been taken. This is normally considered to be when the amount has been • quantified • documented • checked • signed and dated. The documentary evidence of having made an assessment may be, for example the signed and dated schedules. The raising of a form VAT641, the computer input document for the notification of an assessment, is the first stage in the notification process and is a consequence of the decision to assess, rather than the actual making of the assessment itself… The VAT641 should normally be raised on the same day as the assessment is raised or shortly after.”
“The computer input form VAT641 (Adjustments Inputs Form) and continuation sheets are completed by the Assessing Officer to update the trader’s record when an assessment is to be issued. Input of a VAT641 onto the VALID computer system automatically generates a VAT655 (Notice of Assessment(s) and/or Over-declaration) together with any other relevant documentation.”
“Once you have completed the VAT641 and it has been checked, you should capture the form to the trader’s folder in EF and forward (with a secure note attached) to the authorising officer. The authorising officer will then look at case details in the penalty toolkit in SEES (until NPS becomes available) and EF, authorise the VAT641, update the secure note and forward to the VALID team for input… The information which is keyed from this document will be transferred to the VAT Mainframe and processed overnight to update the trader’s files.”
“The decision on whether or not a countersignature is required in the following circumstances is not delegated. Countersignatures are required to provide internal management assurance where: • There is a net over-declaration within an accounting period, or • There is a reduction or withdrawal of an assessment, or • The assessment is complex. Ensuring it has been checked by an independent check officer, should reduce the risk of error or challenge. It should be noted that countersignatures are an internal management assurance tool and do not form part of the making of an assessment. A countersignature is not required to make an assessment.”
“Debbie Can you please countersign this V641, Assessment issued in March 2021, and already appealed. Thanks Penny.”
“This is now an ETMP Migrated trader, The VAT Services Keying Team are only able to key VAT292 forms to ETMP…Unfortunately, due to the processing time for VAT Services, the trader may have since been moved to ETMP from when you first submitted your form. Apologies, but we are therefore now unable to key this form. Thanks.”
“In my opinion therefore the assessment was ‘made’ when the Commissioners through their officers carried out their assessment functions. The power to assess is given to the Commissioners by, for example, sub-paragraph 4(1) and the actual procedure for assessing is left to them. It is usually exercised in the privacy of the LVO [Local Valuation Office]. The procedure involves the taking of the decision to assess, followed by the completion of the officer's assessment and concluding either with the signing by the assessing officer or, as here, with the countersigning by another officer. The act of assessment will have little effect, other than to satisfy the statutory time limits, until the taxpayer is notified in compliance with the concluding words of paragraph 4(1) and (2). Until notification the taxpayer is under no liability to pay; nor does the right of appeal arise. Once notification of the assessment is made the position entirely alters. The right of appeal arises and if it is not exercised the amount due becomes recoverable. I therefore find that the 1994 assessment was ‘made’ on20 April 1994 when it was countersigned by the assistant collector.”
“On 10 May, Mr Walsh prepared a form 641 (an officers assessment). He completed it by hand and incorporated his original figures produced to the Appellant on 10 March except for the revised figure for 5/96 and the resulting annual adjustment. Mr Walsh signed the form as "assessing officer" and dated it10 May 1999 . The form was then also signed and dated10 May 1999 by a Mr Thomson as ‘check officer’. Not all officers assessments need additionally to be countersigned by a senior officer but there are certain stipulated circumstances when they must be…The date of Mr Lambert’s countersignature was a subject of dispute between the parties and as both parties agreed that the date of the counter-signature would be the date the assessment was raised it was clearly a matter of critical importance.”
“Assessment of VAT is an important step, and it is unsatisfactory that the process is not transparent, and not defined by legislation or even by clear administrative practice. But I do not, on the unusual facts of this case, have to decide on the mechanism by which an assessment becomes complete, as it might be necessary to decide in a case where a time limit falls in the course of completion of the Form 641 process and the generation of the notice of assessment.” (5) Although Mr Beale is correct that in Courts at [106], Parker LJ had cited Cheesman, he did so to emphasise the point made in that case that the Commissioners should standardise their process. He went on to say at [107]: “In my judgment, given that the making of an assessment is an internal matter for the Commissioners, in respect of which there is no prescribed statutory procedure, it is simply not possible to arrive at a formula which will determine in every case whether or not an assessment has been made. The Commissioners may, for example, decide to treat certain cases as special or exceptional cases, to which their normal internal processes should not apply.”
“It should be noted that countersignatures are an internal managementassurance tool and do not form part of the making of an assessment. Acountersignature is not required to make an assessment.”
“…for the period prior to IP Completion Day (‘IPCD’), the relevantdomestic legislation must be read compatibly with EU law: seeCase C-106/89 Marleasing[1990] ECR I-4135 , CJEU. The Appellant’s ability to rely on general principles of EU law to construe and (to the extent necessary) modify domestic law to meet EU law requirements is an accrued right which arose well before IPCD on31 December 2020 (at 11pm). Those rights arose pursuant to sections 2(1) and 3(1) of theEuropean Communities Act 1972 and were preserved bysection 16(1) of the Interpretation Act 1978 in the absence of express words of abrogation in theEuropean Union (Withdrawal) Act 2018 (“EUWA 2018”). A taxpayer can rely on general principles of EU law to construe domestic lawconformably with EU law in relation to matters occurring before IPCD: Jersey Choice Limited v Her Majesty’s Treasury[2021] EWCA Civ 1941 at [23]-[24]. Since there is nothing in the EUWA 2018 addressing entitlements or causes of action which have accrued prior to IPCD, section 16 IA 1978 operates in its familiar fashion to preserve those causes of action as they stood at IPCD. Those rights do not need to have been asserted, it is sufficient that they have accrued as an entitlement under domestic law: Chief Adjudication Officer v Maguire[1999] 1 WLR 1778 , CA per Simon Brown LJ at p. 1787. That is confirmed by construing the provisions of EUWA 2018 in their context, including by reference to the wording of section 5A EUWA 2018: R (O) v Secretary of State for the Home Department[2022] UKSC 3 ,[2023] AC 255 , SC at [29]. It has also been confirmed by the terms ofsection 22(5) of the Retained EU Law (Revocation and Reform) Act 2023 , which expressly envisages that general principles of EU law will continue to be applied to anything occurring prior to1 January 2024 …Section 28 of the Finance Act 2024 confirms that section 4 of EUWA 2018 remains in effect for the purposes of interpreting VAT law in the period following1 January 2024 .”
“[105]… By virtue ofs 6(1)(a) of the European Union (Withdrawal) Act 2018 (‘the Withdrawal Act’), a court or tribunal is not bound by any principles laid down or any decisions made by the European Court on or after that date. We remind ourselves, therefore, that we are not bound by the judgment of the Court or the Advocate General’s opinion in Frenetikexito. [106] …by virtue of s 6(2) of the Withdrawal Act we may have regard to the Court’s judgment in Frenetikexito and we consider it particularly useful to do so in circumstances where that judgment attempts to summarise principles from existing law by which we are bound.”
“For the avoidance of doubt, it remains HMRC’s position that the London Pass and London Explorer Pass are not ‘vouchers’ for the purposes of Schedule 10B, VATA 1994, because they are instruments functioning as tickets and thus expressly excluded by paragraph 1(5)(b) of that Schedule.”
“…the Passes function as tickets for admission to the attractions and for travel. It is the case that the Passes do not have to be used to enter only one specific attraction or to make one specific journey. However, that does not mean that they do not function as a ticket.”
“This clause and Schedule transposes Council Directive (EU) 2016/1065, which provides for the VAT treatment of vouchers…This will make the rules for the tax treatment of vouchers consistent, especially where they can be used either in the UK or more widely in the EU.”
“Paragraph 1 defines a ‘voucher’ for the purposes of Schedule 10B as an instrument in physical or electronic form in relation to which three conditions must be met. It also specifies that certain things are not vouchers.”
“Furthermore, contrary to what the Italian Government submits in its written observations, the issuance of an instrument such as the card at issue in the main proceedings cannot be classified as a ‘single provision of services’, in the light of the diversity of the services offered and of third-party economicoperators acting as suppliers of services.”
“to the words used, to the provisions of the agreement as whole, to the surrounding circumstances in so far as they were known to both parties, and to commercial common sense.”
“It is quite wrong to suggest that the economic and commercial reality was that of providing sightseeing services. The use of such a label is simply descriptive of the pastime or activity which a typical passholder was engaged in, but that is not a meaningful basis upon which to classify the services provided by GCL to its customers for VAT purposes.”
“The taxpayer was a United Kingdom company...Its business, which was carried on in the United Kingdom and in Spain, consisted in sellingtimeshare usage rights in properties in holiday resorts situated in those twomember states. In 2003 the taxpayer set up an options scheme to make betteruse of the unsold timeshare inventory, and to offer customers greater flexibility. Under the scheme, customers could acquire ‘points rights’ which could be redeemed for various benefits which included provision of temporaryaccommodation in holiday resorts provided by the taxpayer or hotel accommodation provided by third parties or other services. Points rights could either be purchased from the taxpayer or acquired in return for depositing withthe trustee timeshare usage rights (acquired from the taxpayer) and payment of an ‘enhancement fee’.”
“[23] …it appears that ‘points rights’ under the options scheme are purchased with the intention of using those rights in order to convert them into services offered under the options scheme. [24] …the purchase of ‘points rights’ is not an aim in itself for the customer. The acquisition of such rights and the conversion of points must thus be regarded as preliminary transactions in order to be able to exercise the right to temporarily use a property, or to stay in a hotel or to use another service. [25] Therefore, it is at the final moment of that conversion that the purchaser of ‘points rights’ receives the consideration for his initial payment. [26] According to the case law of the court, the basis of assessment for a supply of services is everything which makes up the consideration for the service supplied and a supply of services is taxable only if there is a direct link between the service supplied and the consideration received by the supplier… [27] Therefore, it appears that, in a scheme such as the options scheme, theactual service for which ‘points rights’ are acquired is the making available toparticipants in that scheme of the various possible benefits which may beobtained by virtue of the points deriving from those rights. The service is notfully supplied until those points are converted. [28] It follows that, in cases where the service consists in providing hotelaccommodation or a right to temporarily use a property, it is when the pointsare converted into specific services that the connection between the service supplied and the consideration paid by the customer is established, theconsideration being constituted by points deriving from previously acquired rights. [29] Furthermore, as regards a system such as that at issue in the mainproceedings, it must [be] stated that, when ‘points rights’ are acquired, thecustomer does not know exactly which accommodation or other services areavailable in a given year or the value in points of a holiday in thataccommodation or of those services. Moreover, it is MRL which determinesthe points classification of the available accommodation and services, so thatthe customer’s choice is limited from the outset to accommodation or serviceswhich are accessible to him with the number of points he has available. [30] In those circumstances, the factors necessary for VAT to becomechargeable are not established when rights such as ‘points rights’ are initiallyacquired, which excludes the application of the second subparagraph ofart 10(2) of the Sixth Directive [31] As follows from the judgment in BUPA Hospitals Ltd v Customs and Excise Comrs (Case C-419/02 )[2006] STC 967 ,[2006] ECR I-1685 , in order for VAT to be chargeable, all the relevant information concerning the chargeable event, namely the future delivery of goods or future performance of services, must already be known and therefore, in particular, the goods or services must be precisely identified. Therefore, payments on account of supplies of goods or services that have not yet been clearly identified cannot be subject to VAT. [32] Since the real service is obtained only when the customer converts thepoints attaching to the ‘points rights’ that he has previously acquired, thechargeable event occurs and the tax becomes chargeable only at that moment,in accordance with the first subparagraph of art 10(2) of the Sixth Directive. [33] It follows that, under such a scheme, it is only when the points convertsthe points deriving from rights previously acquired into the temporary use of a property or hotel accommodation or another service that it is possible todetermine the treatment for VAT purposes applicable to the transaction,according to the type of service supplied. Therefore, in particular, the place of supply is the place where the property or hotel is situated in which the customer obtains the right to stay after conversion of those points. [34] It is true, as the Advocate General points out in points 78 to 85 of heropinion, that problems may arise from the application of that principle, such as the need, with respect to each conversion of points, to convert the pointsredeemed by the customer into a monetary value corresponding to the valueof the ‘points rights’, the problems related to the lack of clarity with respect to the rate of conversion for ‘points rights’ into points, the non-taxation ofrevenue over potentially long periods of time, the problems related to thevariability of VAT rates between the acquisition of ‘points rights’ and theredemption of the corresponding points, and the possibility that the customerdoes not convert his points. [35] However, such difficulties cannot justify the adoption of an approach,such as that suggested by MRL, by which the place of the supply of the serviceis determined by the application of an aggregate method of apportionmentbased on the portfolio of accommodation available when the ‘points rights’were acquired. [36] The application of such a method would also give rise to difficulties of several kinds and would also involve a risk of abuse… [37] Furthermore, such a method of apportionment has no express legal basis in the Sixth Directive. Its only justification would be to simplify the administrative tasks required of MRL in order to fulfil its obligations to the tax authorities.”
“The respondent taxpayer carries on the business of providing access to genealogical and ancestry websites which it owns or in respect of which itholds a licence. Customers who wish to search the historical records on thewebsite may do so without charge. If a customer is to view or download mostof the records on the website, however, he or she will require to pay therespondent. This may be done by taking out a subscription for a fixed period,which confers unlimited use of the records during that period. Alternatively,the customer may use a system known as Pay As You Go (‘PAYG’). Thisinvolves the payment of a lump sum in return for which the customer receivesa number of ‘credits’, sometimes referred to as ‘units’ or ‘vouchers’. Thecredits may be used to view records on the website, and each time a record isviewed some of the credits are used up. The credits are only valid for a fixedperiod, but unused credits may be revived if the customer purchases furthercredits within two years; otherwise they are irrevocably lost.”
“The underlying question is whether value added tax should have beenaccounted for at the time when the vouchers were sold or subsequently, at the time when the vouchers were redeemed. It is in the latter event that thetaxpayer would have a valid claim for repayment. That claim raises threedistinct issues. The first of these is the nature of the supply made by thetaxpayer to customers: whether it was the supply of genealogical recordsselected by the customer and viewed or downloaded by him, or whether thesupply was a ‘package’ of rights and services, which conferred a right to search the records on the various websites to which the taxpayer’s customers had access and, if so desired, to download and print particular items from those websites. If the former is correct, the supply only takes place if and when a particular record is viewed or downloaded; if the latter, the supply includes a general right to search which is exercisable as soon as the credits are purchased, with the result that the supply takes place at that point. The taxpayer contends for the former construction and HMRC for the latter.”
“When a customer acquires PAYG vouchers and makes a payment to thetaxpayer, a number of matters are uncertain. First, and most importantly, it isuncertain whether the chargeable event—redemption of a credit by viewing or downloading a document—will ever occur. This possibility is not hypothetical; the present proceedings have arisen because in a substantial number of cases PAYG credits have not been redeemed. Secondly, it is not clear when redemption will occur, and by that time a number of features of the service might have changed. In particular, the items that are available for viewing and downloading on the taxpayer’s website might have changed. The price in credits to view and download any particular document might have changed by then. It is also theoretically possible that the VAT rate might have changed. Of these factors, the possibility that the available documents might have changed appears to be a real one. In its contractual terms and conditions the taxpayer expressly reserves the right to make changes to the website, including the records and services that are offered. The terms and conditions also provide that the number of credits charged to view a record may be changed from time to time.”
“It is, moreover, significant that, as previously explained, credits are not purchased as an aim in themselves but in order to view and download particular documents. The search facility that precedes access to a particular document is available free, and is in any event at a very general level. Thus both the practical purpose of the credits and the background in which they occur, viewed as a matter of economic reality, lead to the conclusion that the service paid for by a customer is supplied when a document is viewed or downloaded, and not before that time.”
“…The supply is the viewing and downloading of documents, but it cannotbe known at the time when the payment is made how many credits willactually be used and how many will remain unredeemed. That makes itimpossible at that stage for the taxpayer to know how much VAT should beaccounted for. It simply cannot be known in advance whether a credit willremain unused, especially as unused credits can be revived if more credits arepurchased within a specified period…if the extent of that supply cannot be known at that point the system of accounting for VAT becomes unworkable.”
“Without prejudice to Article 73, the taxable amount of the supply of goods or services provided in respect of a multi-purpose voucher shall be equal to the consideration paid for the voucher or, in the absence of information on that consideration, the monetary value indicated on the multi-purpose voucher itself or in the related documentation, less the amount of VAT relating to the goods or services supplied.”
“Where a multi-purpose voucher is used partially in respect of the supply of goods or services, the taxable amount should be equal to the corresponding part of the consideration or the monetary value, less the amount of VAT relating to the goods or services supplied.”
“…if the value of all services redeemed in practice is lower than the price paid for the voucher, the difference must also be subject to VAT. That amount is recognised as consideration for the distribution or promotion of services, in accordance with Article 30b(2) of the VAT Directive, and VAT on that ‘profit margin’ must be accounted for by the issuer of the card.”
“Where a transfer of a multi-purpose voucher is made by a taxable person other than the taxable person carrying out the transaction subject to VAT pursuant to the first subparagraph, any supply of services that can be identified, such as distribution or promotion services, shall be subject to VAT.”
“…where a multi-purpose voucher is the subject of one or more transfers, in the context of a distribution chain extending over the territory of several Member States, prior to its redemption by the end consumer, the question arises as to whether the consideration received on each transfer of that voucher between taxable persons must be subject to VAT as consideration for a service independent of the redemption of that voucher for goods or services.”
“The second subparagraph of Article 30b(2) of the VAT Directive, read in conjunction with Article 73a thereof, is thus intended in particular to prevent the non-taxation of distribution or promotion services, in accordance with the objectives of the VAT Directive, by ensuring that VAT is charged on any profit margin (see, to that effect, Opinion of Advocate General Ćapeta in DSAB Destination Stockholm, C-637/20, EU:C:2022:131, paragraphs 71 to 75.)”
“The CJEU in M-GbR was not exploring the attribution of consideration between different supplies of services redeemed under a MPV which was capable of being partially redeemed over time. It was dealing with the possibility of output tax being due on a separate supply of services made by (a) a taxable person in the chain of transactions to (b) the taxable person who is actually supplying the goods or services redeemed by the final consumer.”
“Where a supply of any goods or services is not the only matter to which a consideration in money relates, the supply shall be deemed to be for such part of the consideration as is properly attributable to it.”
“it is hard not to see the VAT outcome as distortive and contrary to the general principle of VAT as a tax on final consumption, proportionate to the price actually paid by the final consumer.”