Commentary

RCB/46/08 VAT—Court of Appeal decision in the case of Loyalty Management (UK) Ltd (LMUK) – HMRC position, pending outcome of appeal to the House of Lords

Part V16 Forms and other HMRC material

RCB/46/08 VAT—Court of Appeal decision in the case of Loyalty Management (UK) Ltd (LMUK) – HMRC position, pending outcome of appeal to the House of Lords

RCB/46/08 VAT—Court of Appeal decision in the case of Loyalty Management (UK) Ltd (LMUK) – HMRC position, pending outcome of appeal to the House of Lords

Revenue & Customs Brief, Issue 46. 17 September 2008

This brief confirms that the House of Lords has given us leave to appeal the decision of the Court of Appeal in the case of Loyalty Management (UK) Ltd C3/2006/1560 NCN: [2007] EWCA Civ 938 (LMUK). It also provides interim guidance, pending the outcome of our appeal, for those businesses affected by this decision.

Background

LMUK runs the Nectar Loyalty Scheme, whereby members of the public can register as “Collectors” and accumulate Nectar points when they buy qualifying goods or services from “Sponsors”. Collectors are able to exchange these points for rewards of goods or services with specific suppliers, known as “Redeemers”. The Redeemer notifies LMUK of the number of points redeemed on a monthly basis and receives payment from LMUK for these points based on a contractually agreed amount for the points. This payment is described as the “Service Charge”.

LMUK considers that the Service Charge payment is consideration for “redemption services” supplied to it by Redeemers. It contends that these supplies of services are wholly standard rated and

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