In Go City Limited (formerly the Leisure Pass Group Limited) v HMRC [2024] TC9263, the FTT gave judgment over a long-running saga, deciding that visitor passes that combined transport with entry to London attractions are multi-purpose vouchers, not tickets, and therefore outside the scope of VAT.
The appellant sells two types of passes, the London Pass (LP) and the London Explorer Pass (LEP). Both entitle the purchaser to enter various attractions and use certain forms of transport in London without further payment.
Following the company's launch of the voucher in 1999, HMRC initially ruled it to be a 'face value voucher' but later changed that view and decided it was a ticket.
On 6 July 2018, the UK government announced that the VAT Voucher Directive would be implemented with effect from 1 January 2019. This led the company to restructure the pass to ensure it was compliant with the Directive, changing its arrangements from 3 January 2019.
The company and its advisers, KPMG, understood that the changes would mean that the Pass qualified as a Multi-Purpose Voucher and remained out of scope for VAT.
HMRC asked for further information about the appellant’s VAT returns. Eventually, it confirmed that it disagreed with the taxpayer and issued the following assessments:
- On 17 March 2021, for £1,570,122 in relation to VAT period 03/19
- On 22 June 2021, for £2,068,328 in relation to VAT period 06/19
- On 27 September 2021, for £1,835,607 in relation to VAT period 09/19
- On the same day, for £3,835,897 in relation to VAT periods 01/20 to 12/20
The assessments were accompanied by a decision setting out HMRC’s view as to the basis for the Assessments (the Liability Decision). Arguing that the entire purchase price should be allocated as consideration for the taxpayer’s supplies.
HMRC noted that the first two assessments were protective i.e. issued to protect HMRC’s position. The appellant made Appeals against the assessments and the Liability Decision.
On appeal, the FTT found that:
The first two 'protective' assessments should be set aside as invalid: at the time they were made, it did not appear to the Commissioners that the appellant’s returns were incorrect.
The remaining assessments and the Liability Decision should be set aside because:
- The Passes were Multi-PurposeVvouchers as defined by the Principle VAT Directive and VATA Sch 10B, and so outside the scope for VAT purposes.
- HMRC’s challenge to the appellant’s calculation of the consideration was rejected; where a customer did not use all the credits, the unallocated part of the payment was not a consideration for Supply.
The appellant’s appeal were allowed in full.
Editorial comment
Voucher or ticket? What an absurdly complex problem, as noted in our guide below. Perhaps the end of a very long-running tussle with HMRC, the decision notes that there is still a separate further appeal on another matter to come.
Useful guides on this topic
Discounts, Rewards, Vouchers and VAT
Loyalty and reward schemes and vouchers come in various shapes and sizes and the VAT implications may vary depending on the type of scheme offered. This guide reviews the treatment of some common schemes and case law.
How to appeal an HMRC decision
Disagree with an HMRC decision? How do you appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?
How to appeal a tax penalty
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic?
VAT: Time of Supply
The time of supply of goods or services determines the date on which VAT becomes due. There are a number of different rules which must be considered.
External links
. Go City Limited (formerly the Leisure Pass Group Limited) v HMRC [2024] TC9263
