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Cite as: [2008] UKVAT V20774

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Buyagift Ltd (No.2) v Revenue & Customs [2008] UKVAT V20774 (15 August 2008)

20774

PROCEDURE – Earlier decision – Application to argue matters dealt with in decision – Permitted by prior agreement – No – Application dismissed

LONDON TRIBUNAL CENTRE

BUYAGIFT LIMITED (No.2) Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: SIR STEPHEN OLIVER QC (Chairman)

Sitting in public in London on 7 August 2008

Richard Barlow, counsel, for the Appellant

Mario Angiolini, counsel, instructed by the general counsel and the solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

This hearing follows the release of the decision (19856 dated 31 October 2006) of the Tribunal in Buyagift's appeal. The circumstances are set out in paragraphs 4-31 of the Decision.

The issue for the Tribunal at the present hearing is whether Buyagift may now contend that:

(i) the supplies of Buyagift to which the appeal relates are made when customers take up the experiences (as distinct from when the customers purchase the vouchers);

(ii) no supply at all takes place when customers do not take up any activity and

(iii) where the supply of the experience by the operator on presentation of the voucher would be an exempt or a zero-rated supply, Buyagift's supply of the voucher to the customer is correspondingly exempt or zero-rated.

In the Decision the Tribunal analysed the relevant transaction in the following way. What the customer obtains from Buyagift for his money when he contracts with Buyagift for the issue of a voucher is the benefit of the undertaking by the operator (obtained by Buyagift under the "operator agreement" between Buyagift and the operator) to provide the experience. That is the supply of the relevant services by Buyagift. The supply is performed when the customer pays the voucher price to Buyagift and Buyagift issues him with the voucher: see paragraph 45 of the Decision. Properly analysed, the transaction is that of principal to principal as between Buyagift and the customer; Buyagift is not acting as the operator's agent.

For the record I cross-refer each element in the Decision to the Decision itself.

(i) The supply received by the customer is the right for the voucher holder to participate in the activity shown on the voucher (paragraph 42);

(ii) Buyagift is "granting a right" within the meaning of section 5(2)(b) of the VAT Act 1994 and therefore is effecting a supply of services (paragraph 42);

(iii) The consideration paid by the customer is the full price paid, in respective of whether the voucher is redeemed (paragraphs 43 and 57);

(iv) The time of supply is the time when the customer pays for the voucher (paragraphs 44 and 57) and

(v) Buyagift was in all cases acting as principal in effecting the supply to customers (paragraphs 41 and 57).

Richard Barlow representing Buyagift says of the Decision that it only decided that Buyagift was making the relevant supplies to the customer on a principal to principal basis. This contention is based on paragraph 2 of the Decision which reads as follows:

"This decision is concerned only with the issue of principle, i.e. whether Buyagift has been supplying the services as principal. Depending on the way the ruling on that issue goes, the figures of Buyagift's VAT liability will need to be agreed or else determined at a further hearing."

That passage, Mr Barlow says, reflects the agreement that the parties and the tribunal reached at the start of the hearing. Consequently, when he came to reply, he had limited his submissions to challenging the Commissioners' argument that Buyagift had made the supply to the customers as principal. The "additional arguments" ((i) and (ii) in paragraph 2 above) were therefore still open to presentation for Buyagift.

I accept that argument (iii) in paragraph 2 above is still open to Buyagift. It was not touched on in the course of the earlier hearing. If it is still in contention it may be addressed. I do not accept that arguments (i) and (ii) are still in issue. They related to key ingredients in the analysis of the transaction giving rise to the supply. The analysis was that the supply was the service of providing the voucher to the customer in return for payment. The supply was made when the voucher was issued and that supply was made irrespective of whether the voucher was used to take up an experience from the operator. The supply, so analysed, cannot have been one by which Buyagift, in transacting with the customer, acts as the operator's agent. To go back on that analysis would not be open to the Tribunal. The analysis is the decision and to change it is not within our authority as a first instance Tribunal.

Paragraph 2 of the Decision was expressed as it was because of the way the issues came before the Tribunal. The Commissioners' decision had been that Buyagift was liable to account for VAT on the full value of vouchers supplied by Buyagift to its customers and that it was liable to account at the point of sale when it received payment in full from the customer. The Commissioners' Skeleton Arguments observed, in paragraph 3, amendments made by the Commissioners to a number of Buyagift's quarterly returns in related assessments that had been made using figures provided by Buyagift from their accounting package to take into account both outputs and inputs. The Commissioners asked the Tribunal, in order to avoid the need to consider detailed calculations in relation to each accounting period, to rule on the questions of principle arising in the appeal and to leave the quantum of the assessments to be agreed between the parties subsequently, with the possibility of coming before the Tribunal once again should agreement prove impossible.

Buyagift challenged the decision of the Commissioners, arguing that the terms on which the parties had carried on business had been for Buyagift to act as the agent for the operators and for the customers to be customers of the operators.

If Buyagift's challenge were well founded, the VAT position would have been different. If the challenge failed, then the Commissioners' decision that Buyagift was liable to account for VAT on the amount paid by customers to Buyagift and that the time of supply was the point of sale stand good. The reference in paragraph 2 of the Decision to dealing "only with the issue of principle", i.e. whether Buyagift has been supplying the services as principal, was directed at Buyagift's challenge. If the challenge failed, then the proper analysis of the transaction giving rise to the supplies was as claimed by the Commissioners. The concluding words of paragraph 2 of the Decision reflect the difference in calculations of taxable amounts referred to in paragraph 7 above.

Buyagift is still at liberty to argue the third matter referred to in paragraph 2 above. Subject to that, I confirm that the Decision covers all the matters specified in paragraph 4 above.

As to costs, the Commissioners apply for their costs of the present hearing and for the costs incurred from the date of the release of the Decision. I was told that a meeting had taken place between Buyagift's representatives and the Commissioners in February 2008 at which Buyagift were invited to provide details of which experiences constituted exempt and zero-rated supplies. They have not yet done so.

My decision is that Buyagift should pay the Commissioners' costs so far as they relate to the present hearing. These have been incurred because of Buyagift's refusal to accept the Decision.

SIR STEPHEN OLIVER QC

CHAIRMAN

RELEASED: 15 August 2008

LON 2005/0602