In Virgin Media Limited v HMRC [2020] UKFTT 30, the Court of Appeal has refused permission to appeal over how VAT was accounted for on supplies of services to customers.

  • Virgin Media provided fixed line rental services to about 95% of its customers in return for a monthly payment.
  • The remaining 5% of customers (saver customers) chose to pay for 12 months of fixed-line rental services in return for a single payment of a lesser amount than that paid by the monthly customers (saver price).
  • Virgin Media considered that it was liable to account for VAT on the supplies to both monthly customers and saver customers by reference only to the saver price.

HMRC took the view that the prompt payment discount rules did not apply as the saver terms only applied to those who paid the saver price and only after they had paid that price.

  • HMRC concluded that monthly customers received services for consideration of £13.99 per month and savers received 12 months’ worth of services for £120.
  • On that basis, neither group were entitled to the special prompt payment discount rules.
  • HMRC assessed Virgin Media for over £63 million of VAT and over £3 million of interest, relating to 28 August 2012 to 30 April 2014.

Virgin Media appealed.

The First Tier Tribunal (FTT) ruled that the old prompt payment discount rules could not apply to those not using an annual upfront contract saver plan.

The Upper Tribunal disagreed with Virgin Media as to there being a single supply. It considered the correct analysis of the contractual arrangements to be that there are two possible contracts, each with different terms rather than one being seen as a discounted version of the other.

Virgin Media appealed the UT's decision to the Court of Appeal which has now denied it.

Useful guides on this topic

No prompt payment discount for annual phone deal
In Virgin Media Limited v HMRC [2018] TC06730, the First-Tier Tribunal (FTT) ruled that the old prompt payment discount rules could not apply to those not using an annual upfront contract saver plan.


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