United Kingdom VAT & Duties Tribunals Decisions

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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Bookit Ltd v Customs and Excise [2004] UKVAT V18856 (07 December 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/2004/V18856.html
Cite as: [2004] UKVAT V18856

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Bookit Ltd v Customs and Excise [2004] UKVAT V18856 (07 December 2004)

18856

EXEMPT SUPPLIES – Finance – Credit and debit cards – Appellant accepting remote cinema bookings for Odeon – Customers paying by card – Appellant charged 50 pence per ticket to customers – Extent of services to customers – Whether card handling services exempt – Whether any dealing with money – Whether intermediary services supplied in intermediary capacity – Whether "distinct act of mediation" – VATA 1994, Sch 9, Grp 5, Item 1, 5 Note (5) – EEC Sixth Directive Art 13B(a)(1)-(4) – Appeal dismissed

LONDON TRIBUNAL CENTRE

BOOKIT LTD Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: THEODORE WALLACE (Chairman)

MRS LYNNETH SALISBURY JP

Sitting in public in London on 22 November 2004

Jonathan Peacock QC, instructed by Deloitte & Touche, chartered accountants, for the Appellant

Hugh KcKay, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


SUPPLEMENTARY DECISION

1. In paragraph 92 of Decision No.18626 released on 28 May 2004 the Tribunal gave liberty to either party to apply to adduce further evidence as to the means of transmission of information between Bookit and Girobank. We took this course because a decision in principle serves no purpose unless based on correct facts. The Appellant was given leave and served a further statement by Mr Gosling. The matter was listed for further hearing at which Mr Gosling gave further evidence and was cross-examined. We find the following additional facts.
2. Once the Bookit call centre employee has identified the performance sought by the customer, the customer's card number, expiry date and security code are taken, together with his name, postcode and house number. This is keyed onto Bookit's computer to check against the hot list. Assuming the card is not on the hot list and the seats are available the customer is told that the booking is confirmed.
3. No mention is made to the telephone customer of Odeon's terms and conditions. On-line purchasers are informed of the existence of terms and conditions and can click onto icons to see those terms. The terms and conditions are exhibited near the box offices at cinemas. Paragraph 36 thus falls to be modified.
4. Apart from checking against the hot list, customer's card details are not verified until after the booking has been confirmed.
5. At 1.30am in the morning following the booking all Bookit's card transactions are batched together on Bookit's computer system. These batched transactions are then sorted down by reference to the separate card issuing banks ("the Card Issuers") and the details are transmitted on a secure line to each relevant Card Issuer to seek authorisation for the transactions.
6. The Card Issuers apply their own criteria and issue a code for each transaction denoting that it is authorised or rejected. When authorisation is refused the reason is notified, for example, "wrong expiry date", "out of funds", "account closed" or "card stolen". If the reason is "out of funds", Bookit may present the transaction again on the next day in the hope that this time there will be sufficient funds.
7. Bookit then collates the authorised transactions for transmission to Girobank delivering them in a single file by secure line still in the early hours of the morning following the booking. At this point no sums have been debited to customers' accounts with Card Issuers and no sum has been credited to Bookit.
8. Within 1 to 2 days Girobank credits Bookit with the sum for the tickets plus card handling fees debiting the Card Issuer which in turn debits the account of the particular customer. In the event that the customer's bank rejects the debit, for example because the account is in overdraft, then Girobank re-credits the Card Issuer and charges back the debit to Bookit.
9. By obtaining authorisations from Card Issuers Bookit was able to negotiate lower charges by Girobank. Clauses 4.5 to 4.8 of the August Agreement (paragraphs 18 to 22 of the Decision) provided for Bookit to present Card Transaction Data in accordance with the rules laid down from time to time by the Card Issuers. These rules were not exhibited.

Conclusions

10. We considered the conclusions contained in paragraphs 79 to 91 of the Decision in the light of the additional material. Paragraphs 80 and 81 require modification in that they omitted the obtaining by Bookit of authorisation from Card Issuers, which is separate from the prior authorisation required from Girobank where the specified limit or "Floor Limit" is exceeded, and the transmission of the Card Issuers' authorisations to Girobank.
11. Mr Peacock submitted that the obtaining and transmitting of the authorisation is the key step by which a change of a legal and financial character (i.e. payment) is made, so bringing Bookit within item 1.
12. Our conclusion in paragraph 85 remains the same. 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.
13. It was not suggested that the additional material affected our conclusion that Bookit is not performing intermediary services within item 5.

THEODORE WALLACE

CHAIRMAN

RELEASED: 7 December 2004

LON/02/905