HM Revenue and Customs Brief 60/08
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Issued 17 December 2008
VAT: Court of Appeal decision in the case of Loyalty Management (UK) Ltd -
further clarification of HMRC position, pending outcome of appeal to the House
In October 2007 HM Revenue & Customs (HMRC) lost the Loyalty Management (UK)
Ltd (LMUK) case C3/2006/1560, concerning the VAT treatment of payments for
Nectar scheme rewards, in the Court of Appeal. The Court of Appeal decided that
the payments made by LMUK to Nectar scheme 'Redeemers', known as 'service
charges', were for taxable supplies of ‘redemption services’ by the Redeemer to
LMUK. LMUK is entitled to claim input tax on the amounts it has paid to
Redeemers, so long as that decision remains in effect.
We were granted leave to appeal to the House of Lords, which have referred
the matter, as well as the appeal in Baxi Group Ltd, to the European Court of
Justice without full hearing. Our position, pending the resolution of the
litigation, was set out in Revenue & Customs Brief 46/08 issued on 17 September
2008, and included guidance to Redeemers, that they should treat the service
charges as consideration for supplies by them to LMUK, and so issue tax invoices
to LMUK for VAT on these amounts. They may submit protective claims, if
appropriate, in case we succeed in the litigation in the end.
This brief clarifies that Redeemers in the Nectar scheme who are not
correctly treating the supplies in accordance with the guidance set out in
Revenue & Customs Brief 46/08 must now do so from 17 September 2008, which is
the date that the brief took effect. Any guidance given to any Redeemer prior to
that date, which was different to the guidance in that brief, is withdrawn from
the date of Revenue & Customs Brief 46/08. The treatment advised in that brief
will continue in effect until further notice.
For further help or advice, please contact the National Advice Service on Tel
0845 010 9000 or 0845 000 0200 (text phone).
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© Crown Copyright 2008.
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Article Published/Sorted/Amended on Scopulus 2008-12-18 12:48:01 in Tax Articles