In Lucky Technology Limited v HMRC [2022] TC08616, the First Tier Tribunal (FTT) held that input VAT could be reclaimed on Steam vouchers purchased from a Harrods concession. They were retailer vouchers, Harrods was acting as principal not agent, so VAT had correctly been charged and could be reclaimed.

Retailer vouchers are either Single Purpose Vouchers (SPV) or Multi-purpose Vouchers (MPV).

  • Where an SPV is issued, VAT is payable at the time the voucher is issued.
  • Where an MPV is issued, VAT is payable when the voucher is redeemed, not at issue.
  • Where the SPV is sold to an intermediary, and the intermediary is acting as a Principal, VAT is charged. The intermediary recovers the VAT and charges VAT on onward supplies.
  • If the intermediary is acting as Agent, it will not recover the VAT it is charged and will not charge VAT on onward supplies.

Lucky Technology Limited (Lucky) buys and sells vouchers:

  • It bought vouchers for use on the Steam online gaming platform from a Harrods concession, DSG Retail in 2016. Some were e-vouchers and others Point Of Sale (POS) cards.
  • Bulk invoices from Harrods showed VAT at 20% for the first set of purchase transactions (pre-May 2016) and at 0% for the second set, post-May 2016. Other than the VAT rate on the invoices the transactions were identical.
  • HMRC allowed input VAT claims for the pre-May 2016 transactions but not for those post-May 2016, which totalled £386,467. This was on the basis that Harrods was wrong to have charged VAT on the pre-May invoices as the vouchers:
    • Were not single-purpose vouchers.
    • Were multi-purpose vouchers.
    • Were not subject to VAT.
    • Were retailer vouchers and 'all those in the supply chain' for the vouchers were agents between Steam and Lucky such that Lucky was the first purchaser of the voucher and had no input VAT to recover.
  • Lucky Appealed on the grounds that either:
    • The vouchers were SPVs as they could only be used to buy games, or
    • They were retailer vouchers and Harrods was acting as principal not agent, so the vouchers were subject to VAT.
    • Even if Harrods was an agent it was part of the supply chain and making taxable supplies and VAT was being paid as part of the purchase price of the vouchers.

The FTT allowed the appeal. Lucky could reclaim input VAT on the post-May 2016 voucher purchases.

  • The vouchers were not SPVs. They were retailer vouchers. It appeared from the evidence available that the vouchers could be used to purchase both games and hardware.
  • Harrods was not acting as an agent in supplying the vouchers to Lucky but as principal.
    • Steam was the first issuer of the voucher so consideration for Steam’s issue was to be disregarded. This would also apply to Harrods if they were acting as Steam’s agent as there would be no subsequent supply, but they were not.
    • The concession agreement between Harrods and DSG Retail made DSG Harrod’s agent, so Harrods was acting as principal, not as agent.
    • The fact that the e-vouchers had no value until activated did not mean that they were only issued at the point of activation and did not make Harrods an agent of Steam.
    • Lucky had paid VAT on the post-May 2016 transactions:
      • VAT was properly chargeable so the price paid could be assumed to have VAT included.
      • There was no evidence from Harrods to the contrary. Nothing was said to Lucky to indicate a change to the VAT position compared to that pre-May 2016 when invoices had been issued showing VAT.
      • The prices remained the same pre and post-May 2016.
      • The fact that Lucky did not hold a VAT invoice did not mean it had not incurred and paid VAT on the supplies.

Useful guides on this topic

Discounts, Reward Schemes & Vouchers: VAT
Loyalty and reward schemes come in various shapes and sizes and the VAT implications may vary depending on the type of scheme offered. This guide covers some common schemes.

Agents and principals
What is an agent for VAT purposes? When do the agency rules apply? 

Input VAT: What constitutes a valid claim (& VAT invoice)?
What is Input VAT? Who can claim it? What is needed for a valid claim? What needs to be included on a VAT invoice and can you make a claim without one?

External link

Lucky Technology Limited v HMRC [2022] TC08616 

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